##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Transition Period From  To
 Commission File Number: 000-30421
 HANMI FINANCIAL CORPORATION
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    95-4788120(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)3660 Wilshire Boulevard, Penthouse Suite ALos Angeles, California
    
    90010(Address of Principal Executive Offices)
    
    (Zip Code)
 (213) 382-2200
 (Registrants Telephone Number, Including Area Code)
 Not Applicable
 (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
 þ o
 o o
  Large Accelerated Filer o
Accelerated Filer þ
Non-Accelerated Filer o(Do Not Check if a Smaller Reporting Company)
Smaller Reporting Company o
  ̈ x




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  QUARTERLY REPORT ON FORM 10-Q  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets (Unaudited)
    
    
    1Consolidated Statements of Operations (Unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income
(Loss) (Unaudited)
    
    
    3Consolidated Statements of Cash Flows (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    24ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    53ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    53PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    53ITEM 1A.
    
    RISK FACTORS
    
    
    54ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    55ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    55ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    56ITEM 5.
    
    OTHER INFORMATION
    
    
    56ITEM 6.
    
    EXHIBITS
    
    
    57SIGNATURES
    
    
    59EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)  (In Thousands, Except Share Data)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCash and Due From Banks
    
    $
    382,826
    
    
    $
    85,188Federal Funds Sold
    
    
    
    
    
    
    130,000Cash and Cash Equivalents
    
    
    382,826
    
    
    
    215,188Investment Securities Held to Maturity, at Amortized Cost (Fair Value of $887 as of June 30,
2009 and $910 as of December 31, 2008)
    
    
    886
    
    
    
    910Investment Securities Available for Sale, at Fair Value (Amortized Cost of $214,554 as of June 30,
2009 and $195,836 as of December 31, 2008)
    
    
    217,937
    
    
    
    196,966Loans Receivable, Net of Allowance for Loan Losses of $105,268 as of June 30, 2009 and
$70,986 as of December 31, 2008
    
    
    3,018,422
    
    
    
    3,253,715Loans Held for Sale, at the Lower of Cost or Fair Value
    
    
    34,257
    
    
    
    37,410Due from Customers on Acceptances
    
    
    1,916
    
    
    
    4,295Premises and Equipment, Net
    
    
    19,833
    
    
    
    20,279Accrued Interest Receivable
    
    
    12,118
    
    
    
    12,347Other Real Estate Owned, Net
    
    
    34,018
    
    
    
    823Servicing Assets
    
    
    3,444
    
    
    
    3,791Other Intangible Assets, Net
    
    
    4,115
    
    
    
    4,950Investment in Federal Home Loan Bank Stock, at Cost
    
    
    30,697
    
    
    
    30,697Investment in Federal Reserve Bank Stock, at Cost
    
    
    10,053
    
    
    
    10,228Income Taxes Receivable
    
    
    30,499
    
    
    
    11,712Bank-Owned Life Insurance
    
    
    25,937
    
    
    
    25,476Other Assets
    
    
    43,893
    
    
    
    47,029TOTAL ASSETS
    
    $
    3,870,851
    
    
    $
    3,875,816LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-Bearing
    
    $
    547,737
    
    
    $
    536,944Interest-Bearing
    
    
    2,740,186
    
    
    
    2,533,136Total Deposits
    
    
    3,287,923
    
    
    
    3,070,080Accrued Interest Payable
    
    
    31,859
    
    
    
    18,539Bank Acceptances Outstanding
    
    
    1,916
    
    
    
    4,295Federal Home Loan Bank Advances
    
    
    210,952
    
    
    
    422,196Other Borrowings
    
    
    2,532
    
    
    
    787Junior Subordinated Debentures
    
    
    82,406
    
    
    
    82,406Accrued Expenses and Other Liabilities
    
    
    14,137
    
    
    
    13,598Total Liabilities
    
    
    3,631,725
    
    
    
    3,611,901COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common Stock, $0.001 Par Value; Authorized 200,000,000 Shares; 50,763,467 Shares Issued
(46,130,967 Shares Outstanding) as of June 30, 2009 and 50,538,049 Shares Issued
(45,905,549 Shares Outstanding) as of December 31, 2008
    
    
    51
    
    
    
    51Additional Paid-In Capital
    
    
    350,005
    
    
    
    349,304Unearned Compensation
    
    
    (384
    )
    
    
    (218
    )Accumulated Other Comprehensive Income  Unrealized Gain on Investment Securities Available
for Sale, Net of Income Taxes of $1,423 as of
June 30, 2009 and $473 as of December 31, 2008
    
    
    1,951
    
    
    
    544Retained Deficit
    
    
    (42,485
    )
    
    
    (15,754
    )Less Treasury Stock, at Cost; 4,632,500 Shares as of June 30, 2009 and December 31, 2008
    
    
    (70,012
    )
    
    
    (70,012
    )Total Stockholders Equity
    
    
    239,126
    
    
    
    263,915TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,870,851
    
    
    $
    3,875,816
  1




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  (Dollars in Thousands, Except Per Share Data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008INTEREST AND DIVIDEND INCOME:Interest and Fees on Loans
    
    $
    44,718
    
    
    $
    55,905
    
    
    $
    89,803
    
    
    $
    116,503Taxable Interest on Investment Securities
    
    
    1,381
    
    
    
    2,579
    
    
    
    2,733
    
    
    
    5,695Tax-Exempt Interest on Investment Securities
    
    
    621
    
    
    
    662
    
    
    
    1,264
    
    
    
    1,421Dividends on Federal Home Loan Bank Stock
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    548Dividends on Federal Reserve Bank Stock
    
    
    153
    
    
    
    176
    
    
    
    306
    
    
    
    352Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements
    
    
    112
    
    
    
    31
    
    
    
    194
    
    
    
    114Interest on Term Federal Funds Sold
    
    
    695
    
    
    
    
    
    
    
    1,395
    
    
    
    Total Interest and Dividend Income
    
    
    47,680
    
    
    
    59,663
    
    
    
    95,695
    
    
    
    124,633INTEREST EXPENSE:Interest on Deposits
    
    
    22,686
    
    
    
    20,487
    
    
    
    45,471
    
    
    
    45,334Interest on Federal Home Loan Bank Advances
    
    
    1,010
    
    
    
    3,929
    
    
    
    2,122
    
    
    
    8,082Interest on Other Borrowings
    
    
    2
    
    
    
    15
    
    
    
    2
    
    
    
    339Interest on Junior Subordinated Debentures
    
    
    846
    
    
    
    1,164
    
    
    
    1,834
    
    
    
    2,613Total Interest Expense
    
    
    24,544
    
    
    
    25,595
    
    
    
    49,429
    
    
    
    56,368NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
    
    
    23,136
    
    
    
    34,068
    
    
    
    46,266
    
    
    
    68,265Provision for Credit Losses
    
    
    23,934
    
    
    
    19,229
    
    
    
    69,887
    
    
    
    37,050NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES
    
    
    (798
    )
    
    
    14,839
    
    
    
    (23,621
    )
    
    
    31,215NON-INTEREST INCOME:Service Charges on Deposit Accounts
    
    
    4,442
    
    
    
    4,539
    
    
    
    8,757
    
    
    
    9,256Insurance Commissions
    
    
    1,185
    
    
    
    1,384
    
    
    
    2,367
    
    
    
    2,699Remittance Fees
    
    
    545
    
    
    
    539
    
    
    
    1,068
    
    
    
    1,044Trade Finance Fees
    
    
    499
    
    
    
    825
    
    
    
    1,005
    
    
    
    1,690Other Service Charges and Fees
    
    
    467
    
    
    
    703
    
    
    
    950
    
    
    
    1,419Bank-Owned Life Insurance Income
    
    
    227
    
    
    
    234
    
    
    
    461
    
    
    
    474Gain on Sales of Investment Securities
    
    
    1
    
    
    
    
    
    
    
    1,277
    
    
    
    618Loss on Sales of Investment Securities
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    Net Gain on Sales of Loans
    
    
    
    
    
    
    552
    
    
    
    2
    
    
    
    765Other Operating Income (Loss)
    
    
    (695
    )
    
    
    876
    
    
    
    (727
    )
    
    
    1,452Total Non-Interest Income
    
    
    6,671
    
    
    
    9,652
    
    
    
    15,051
    
    
    
    19,417NON-INTEREST EXPENSE:Salaries and Employee Benefits
    
    
    8,508
    
    
    
    11,301
    
    
    
    16,011
    
    
    
    22,581Occupancy and Equipment
    
    
    2,788
    
    
    
    2,792
    
    
    
    5,672
    
    
    
    5,574Deposit Insurance Premiums and Regulatory Assessments
    
    
    3,929
    
    
    
    758
    
    
    
    5,419
    
    
    
    1,318Data Processing
    
    
    1,547
    
    
    
    1,698
    
    
    
    3,083
    
    
    
    3,232Other Real Estate Owned Expense
    
    
    1,502
    
    
    
    
    
    
    
    1,645
    
    
    
    139Professional Fees
    
    
    890
    
    
    
    995
    
    
    
    1,506
    
    
    
    1,980Loan-Related Expense
    
    
    1,217
    
    
    
    240
    
    
    
    1,398
    
    
    
    399Advertising and Promotion
    
    
    624
    
    
    
    888
    
    
    
    1,193
    
    
    
    1,700Supplies and Communication
    
    
    599
    
    
    
    623
    
    
    
    1,169
    
    
    
    1,327Amortization of Other Intangible Assets
    
    
    406
    
    
    
    502
    
    
    
    835
    
    
    
    1,026Other Operating Expenses
    
    
    2,686
    
    
    
    2,253
    
    
    
    5,017
    
    
    
    4,362Impairment Loss on Goodwill
    
    
    
    
    
    
    107,393
    
    
    
    
    
    
    
    107,393Total Non-Interest Expense
    
    
    24,696
    
    
    
    129,443
    
    
    
    42,948
    
    
    
    151,031LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
    
    
    (18,823
    )
    
    
    (104,952
    )
    
    
    (51,518
    )
    
    
    (100,399
    )Provision (Benefit) for Income Taxes
    
    
    (9,288
    )
    
    
    595
    
    
    
    (24,787
    )
    
    
    2,227NET LOSS
    
    $
    (9,535
    )
    
    $
    (105,547
    )
    
    $
    (26,731
    )
    
    $
    (102,626
    )LOSS PER SHARE:Basic
    
    $
    (0.21
    )
    
    $
    (2.30
    )
    
    $
    (0.58
    )
    
    $
    (2.24
    )Diluted
    
    $
    (0.21
    )
    
    $
    (2.30
    )
    
    $
    (0.58
    )
    
    $
    (2.24
    )WEIGHTED-AVERAGE SHARES OUTSTANDING:Basic
    
    
    45,924,767
    
    
    
    45,881,549
    
    
    
    45,907,998
    
    
    
    45,861,963Diluted
    
    
    45,924,767
    
    
    
    45,881,549
    
    
    
    45,907,998
    
    
    
    45,861,963DIVIDENDS DECLARED PER SHARE
    
    $
    
    
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.09
  2




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)  (In Thousands; Except Share Data)
 Common Stock - Number of Shares
    
    
    Stockholders EquityAccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    Retained
    
    
    Treasury
    
    
    TotalTreasury
    
    
    
    
    
    
    Common
    
    
    Paid-In
    
    
    Unearned
    
    
    Comprehensive
    
    
    Earnings
    
    
    Stock,
    
    
    StockholdersIssued
    
    
    Stock
    
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    at Cost
    
    
    EquityBALANCE AS OF JANUARY 1, 2008
    
    
    50,493,441
    
    
    
    (4,632,500
    )
    
    
    45,860,941
    
    
    $
    50
    
    
    $
    348,073
    
    
    $
    (245
    )
    
    $
    275
    
    
    $
    92,415
    
    
    $
    (70,012
    )
    
    $
    370,556Cumulative-Effect Adjustment from the
Adoption of EITF Issue No. 06-4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,223
    )
    
    
    
    
    
    
    (2,223
    )Shares Issued for Business Acquisitions
    
    
    39,608
    
    
    
    
    
    
    
    39,608
    
    
    
    1
    
    
    
    292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293Repurchase of Stock Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    482
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    507Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,991
    )
    
    
    
    
    
    
    (3,991
    )Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102,626
    )
    
    
    
    
    
    
    (102,626
    )Change in Unrealized Gain (Loss) on
Investment Securities Available for Sale,
Net of Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (941
    )
    
    
    
    
    
    
    
    
    
    
    (941
    )Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103,567
    )BALANCE AS OF JUNE 30, 2008
    
    
    50,533,049
    
    
    
    (4,632,500
    )
    
    
    45,900,549
    
    
    $
    51
    
    
    $
    348,777
    
    
    $
    (220
    )
    
    $
    (666
    )
    
    $
    (16,425
    )
    
    $
    (70,012
    )
    
    $
    261,505BALANCE AS OF JANUARY 1, 2009
    
    
    50,538,049
    
    
    
    (4,632,500
    )
    
    
    45,905,549
    
    
    $
    51
    
    
    $
    349,304
    
    
    $
    (218
    )
    
    $
    544
    
    
    $
    (15,754
    )
    
    $
    (70,012
    )
    
    $
    263,915Shares Issued for Business Acquisitions
    
    
    39,418
    
    
    
    
    
    
    
    39,418
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    460
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    489Restricted Stock Awards
    
    
    190,000
    
    
    
    
    
    
    
    190,000
    
    
    
    
    
    
    
    259
    
    
    
    (259
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeiture of Restricted Stock Award
    
    
    (4,000
    )
    
    
    
    
    
    
    (4,000
    )
    
    
    
    
    
    
    (64
    )
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,731
    )
    
    
    
    
    
    
    (26,731
    )Change in Unrealized Gain on Investment
Securities Available for Sale, Net of
Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    1,407Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,324
    )BALANCE AS OF JUNE 30, 2009
    
    
    50,763,467
    
    
    
    (4,632,500
    )
    
    
    46,130,967
    
    
    $
    51
    
    
    $
    350,005
    
    
    $
    (384
    )
    
    $
    1,951
    
    
    $
    (42,485
    )
    
    $
    (70,012
    )
    
    $
    239,126
  3




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  (In Thousands)
 Six Months EndedJune 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (26,731
    )
    
    $
    (102,626
    )Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities:Depreciation and Amortization of Premises and Equipment
    
    
    1,329
    
    
    
    1,477Amortization of Premiums and Accretion of Discounts on Investment Securities, Net
    
    
    (957
    )
    
    
    75Amortization of Other Intangible Assets
    
    
    835
    
    
    
    1,026Amortization of Servicing Assets
    
    
    421
    
    
    
    (700
    )Share-Based Compensation Expense
    
    
    489
    
    
    
    507Provision for Credit Losses
    
    
    69,887
    
    
    
    37,050Federal Home Loan Bank Stock Dividends
    
    
    
    
    
    
    (820
    )Net Gain on Sales of Investment Securities
    
    
    (1,168
    )
    
    
    (618
    )Net Gain on Sales of Loans
    
    
    (2
    )
    
    
    (765
    )Loss on Sales of Other Real Estate Owned
    
    
    324
    
    
    
    132Provision for Valuation Allowance on Other Real Estate Owned
    
    
    1,001
    
    
    
    Impairment Loss on Goodwill
    
    
    
    
    
    
    107,393Origination of Loans Held for Sale
    
    
    (199
    )
    
    
    (26,095
    )Net Proceeds from Sales of Loans Held for Sale
    
    
    3,354
    
    
    
    24,037Decrease in Accrued Interest Receivable
    
    
    229
    
    
    
    4,256(Increase) Decrease in Servicing Asset
    
    
    (74
    )
    
    
    708Increase in Cash Surrender Value of Bank-Owned Life Insurance
    
    
    (461
    )
    
    
    (473
    )Increase in Other Assets
    
    
    (16,497
    )
    
    
    (4,909
    )Increase (Decrease) in Accrued Interest Payable
    
    
    13,320
    
    
    
    (5,245
    )Increase (Decrease) in Other Liabilities
    
    
    390
    
    
    
    (2,778
    )Net Cash Provided By Operating Activities
    
    
    45,490
    
    
    
    31,632CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Redemption of Federal Home Loan Bank and Federal Reserve Bank Stock
    
    
    175
    
    
    
    282Proceeds from Matured or Called Investment Securities Available for Sale
    
    
    38,494
    
    
    
    87,814Proceeds from Sales of Investment Securities Available for Sale
    
    
    38,448
    
    
    
    24,001Proceeds from Sales of Other Real Estate Owned
    
    
    215
    
    
    
    155Net Decrease (Increase) in Loans Receivable
    
    
    130,866
    
    
    
    (80,865
    )Purchases of Federal Home Loan Bank Stock
    
    
    
    
    
    
    (7,113
    )Purchases of Investment Securities Available for Sale
    
    
    (93,511
    )
    
    
    (25,345
    )Purchases of Premises and Equipment
    
    
    (883
    )
    
    
    (1,480
    )Net Cash Provided By (Used in) Investing Activities
    
    
    113,804
    
    
    
    (2,551
    )CASH FLOWS FROM FINANCING ACTIVITIES:Increase (Decrease) in Deposits
    
    
    217,843
    
    
    
    (40,139
    )Cash Paid to Repurchase Stock Options
    
    
    
    
    
    
    (70
    )Cash Dividends Paid
    
    
    
    
    
    
    (3,991
    )Proceeds from Long-Term Federal Home Loan Bank Advances
    
    
    
    
    
    
    150,000Repayment of Long-Term Federal Home Loan Bank Advances
    
    
    (107,061
    )
    
    
    (231
    )Net Change in Short-Term Federal Home Loan Bank Advances and Other Borrowings
    
    
    (102,438
    )
    
    
    (136,826
    )Net Cash Provided By (Used In) Financing Activities
    
    
    8,344
    
    
    
    (31,257
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    167,638
    
    
    
    (2,176
    )Cash and Cash Equivalents at Beginning of Period
    
    
    215,188
    
    
    
    122,398CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    382,826
    
    
    $
    120,222SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash Paid During the Period for:Interest Paid
    
    $
    36,109
    
    
    $
    65,717Income Taxes Paid
    
    $
    
    
    
    $
    11,278Non-Cash Activities:Stock Issued for Business Acquisition
    
    $
    46
    
    
    $
    293Transfer of Loans to Other Real Estate Owned
    
    $
    34,735
    
    
    $
    
  4




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
 NOTE 1  BASIS OF PRESENTATION
    Note 1  Summary of Significant Accounting Policies
 NOTE 2  LIQUIDITY
 Disclosure of Certain Significant Risks and Uncertainties,
 Hanmi Financial
  5




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 2  LIQUIDITY (Continued)
 Hanmi Bank
     6




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS
 Fair Value Option and Fair Value Measurements
 Fair Value Measurements. Effective Date of FASB Statement No. 157.
 The Fair Value Option for Financial Assets
and Financial Liabilities.
 , Determining Fair Value of a Financial Asset
in a Market That Is Not Active.
 Interim Disclosures About Fair
Value of Financial Instruments,
 Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly, Note 4  Investment Securities.
 7




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Recognition and Presentation of Other-Than-Temporary
Impairments,
 Fair Value Measurement
  
    
    Level 1 Quoted prices (unadjusted) for identical assets or liabilities in active
markets that the entity has the ability to access as of the measurement date.
    
    Level 2 Significant other observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities, quoted prices in markets that are not active, and
other inputs that are observable or can be corroborated by observable market data.
    
    Level 3 Significant unobservable inputs that reflect a companys own assumptions about
the assumptions that market participants would use in pricing an asset or liability.
  Investment Securities Available for Sale
 8




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Loans Held for Sale
 Impaired Loans Accounting by Creditors for Impairment of a Loan,
 Other Real Estate Owned
 Servicing Assets and Servicing Liabilities
 Other Intangible Assets
 9




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  Level 2SignificantLevel 1
    
    
    ObservableQuoted Prices in
    
    
    Inputs With No
    
    
    Level 3Active Markets
    
    
    Active Market
    
    
    Significant
    
    
    Balance as offor Identical
    
    
    With Identical
    
    
    Unobservable
    
    
    June 30,Assets
    
    
    Characteristics
    
    
    Inputs
    
    
    2009(In Thousands)ASSETS:Investment Securities Available for Sale:Mortgage-Backed Securities
    
    $
    
    
    
    $
    84,707
    
    
    $
    
    
    
    $
    84,707Municipal Bonds
    
    
    
    
    
    
    58,152
    
    
    
    
    
    
    
    58,152U.S. Government Agency Securities
    
    
    37,968
    
    
    
    
    
    
    
    
    
    
    
    37,968Collateralized Mortgage Obligations
    
    
    
    
    
    
    18,497
    
    
    
    
    
    
    
    18,497Other Securities
    
    
    
    
    
    
    7,130
    
    
    
    1,571
    
    
    
    8,701Asset-Backed Securities
    
    
    
    
    
    
    8,516
    
    
    
    
    
    
    
    8,516Equity Securities
    
    
    992
    
    
    
    
    
    
    
    
    
    
    
    992Corporate Bonds
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    404Total Investment Securities Available for Sale
    
    $
    38,960
    
    
    $
    177,406
    
    
    $
    1,571
    
    
    $
    217,937Servicing Assets
    
    $
    
    
    
    $
    
    
    
    $
    3,444
    
    
    $
    3,444LIABILITIES:Servicing Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (222
    )
    
    $
    (222
    )
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Realized andUnrealizedBeginning
    
    
    
    
    
    Realized and
    
    Gains (Losses)
    
    
    
    
    
    EndingBalance as of
    
    Purchases,
    
    Unrealized
    
    in Other
    
    Transfers
    
    Balance as ofApril 1,
    
    Issuances and
    
    Gains (Losses)
    
    Comprehensive
    
    In and/or Out
    
    June 30,2009
    
    Settlements
    
    in Earnings
    
    Income
    
    of Level 3
    
    2009(In Thousands)ASSETS:Investment Securities Available
for Sale: Other Securities
    
    $
    1,416
    
    
    $
    
    
    
    $
    
    
    
    $
    155
    
    
    $
    
    
    
    $
    1,571Servicing Assets
    
    $
    3,630
    
    
    $
    
    
    
    $
    (186
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,444LIABILITIES:Servicing Liabilities
    
    $
    (232
    )
    
    $
    
    
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    (222
    )
 10




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Realized andUnrealizedBeginning
    
    
    
    
    
    Realized and
    
    Gains (Losses)
    
    
    
    
    
    EndingBalance as of
    
    Purchases,
    
    Unrealized
    
    in Other
    
    Transfers
    
    Balance as ofJanuary 1,
    
    Issuances and
    
    Gains (Losses)
    
    Comprehensive
    
    In and/or Out
    
    June 30,2009
    
    Settlements
    
    in Earnings
    
    Income
    
    of Level 3
    
    2009(In Thousands)ASSETS:Investment Securities Available
for Sale: Other Securities
    
    $
    1,311
    
    
    $
    
    
    
    $
    
    
    
    $
    260
    
    
    $
    
    
    
    $
    1,571Servicing Assets
    
    $
    3,791
    
    
    $
    74
    
    
    $
    (421
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,444LIABILITIES:Servicing Liabilities
    
    $
    (238
    )
    
    $
    
    
    
    $
    16
    
    
    $
    
    
    
    $
    
    
    
    $
    (222
    )
 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
  Level 2SignificantLevel 1
    
    ObservableQuoted Prices in
    
    Inputs With No
    
    Level 3Active Markets
    
    Active Market
    
    Significant
    
    Balance as offor Identical
    
    With Identical
    
    Unobservable
    
    June 30,Assets
    
    Characteristics
    
    Inputs
    
    2009(In Thousands)ASSETS:Loans Held for Sale
    
    $
    
    
    
    $
    34,257
    
    
    $
    
    
    
    $
    34,257Impaired Loans
    
    $
    
    
    
    $
    45,088
    
    
    $
    
    
    
    $
    45,088Other Real Estate Owned
    
    $
    
    
    
    $
    34,018
    
    
    $
    
    
    
    $
    34,018Other Intangible Assets
    
    $
    
    
    
    $
    
    
    
    $
    4,115
    
    
    $
    4,115
 Assets and Liabilities Not Measured at Fair Value on a Recurring or Non-Recurring Basis
 Disclosures About Fair Value of Instruments,
  11




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
  June 30, 2009
    
    December 31, 2008Carrying
    
    Carrying
    
    Estimated
    
    Estimatedor Contract
    
    Fair
    
    or Contract
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In Thousands)Financial Assets:Cash and Cash Equivalents
    
    $
    382,826
    
    
    $
    382,826
    
    
    $
    215,188
    
    
    $
    215,188Investment Securities Held to Maturity
    
    
    886
    
    
    
    887
    
    
    
    910
    
    
    
    910Investment Securities Available for Sale
    
    
    217,937
    
    
    
    217,937
    
    
    
    196,966
    
    
    
    196,966Loans Receivable, Net of Allowance for Loan Losses
    
    
    3,018,422
    
    
    
    2,923,248
    
    
    
    3,251,311
    
    
    
    3,246,955Accrued Interest Receivable
    
    
    12,118
    
    
    
    12,118
    
    
    
    12,347
    
    
    
    12,347Investment in Federal Home Loan Bank Stock
    
    
    30,697
    
    
    
    30,697
    
    
    
    30,697
    
    
    
    30,697Investment in Federal Reserve Bank Stock
    
    
    10,053
    
    
    
    10,053
    
    
    
    10,228
    
    
    
    10,228Financial Liabilities:Noninterest-Bearing Deposits
    
    
    547,737
    
    
    
    547,737
    
    
    
    536,944
    
    
    
    536,944Interest-Bearing Deposits
    
    
    2,740,186
    
    
    
    2,751,276
    
    
    
    2,533,136
    
    
    
    2,538,394Borrowings
    
    
    295,890
    
    
    
    299,346
    
    
    
    505,389
    
    
    
    506,429Accrued Interest Payable
    
    
    31,859
    
    
    
    31,859
    
    
    
    18,539
    
    
    
    18,539Off-Balance Sheet Items:Commitments to Extend Credit
    
    
    349,643
    
    
    
    367
    
    
    
    386,785
    
    
    
    384Standby Letters of Credit
    
    
    41,884
    
    
    
    127
    
    
    
    47,289
    
    
    
    194
  Cash and Cash Equivalents
 Investment Securities
 Loans Receivable, Net of Allowance for Loan Losses
 Accrued Interest Receivable
 Investment in Federal Home Loan Bank Stock and Investment in Federal Reserve Bank Stock
 Noninterest-Bearing Deposits
 Interest-Bearing Deposits
 12




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Borrowings
 Accrued Interest Payable
 Commitments to Extend Credit and Standby Letters of Credit
 NOTE 4  INVESTMENT SECURITIES
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    Value(In Thousands)June 30, 2009:Municipal Bonds
    
    $
    695
    
    
    $
    
    
    
    $
    
    
    
    $
    695Mortgage-Backed Securities (1)
    
    
    191
    
    
    
    1
    
    
    
    
    
    
    
    192$
    886
    
    
    $
    1
    
    
    $
    
    
    
    $
    887December 31, 2008:Municipal Bonds
    
    $
    695
    
    
    $
    
    
    
    $
    
    
    
    $
    695Mortgage-Backed Securities (1)
    
    
    215
    
    
    
    
    
    
    
    
    
    
    
    215$
    910
    
    
    $
    
    
    
    $
    
    
    
    $
    910
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government
sponsored entities. 13




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 4  INVESTMENT SECURITIES (Continued)
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    Value(In Thousands)June 30, 2009:Mortgage-Backed Securities (1)
    
    $
    83,825
    
    
    $
    1,116
    
    
    $
    234
    
    
    $
    84,707Municipal Bonds
    
    
    56,712
    
    
    
    1,511
    
    
    
    71
    
    
    
    58,152U.S. Government Agency Securities
    
    
    38,324
    
    
    
    49
    
    
    
    405
    
    
    
    37,968Collateralized Mortgage Obligations (2)
    
    
    18,186
    
    
    
    313
    
    
    
    2
    
    
    
    18,497Other Securities
    
    
    8,130
    
    
    
    645
    
    
    
    74
    
    
    
    8,701Asset-Backed Securities
    
    
    8,502
    
    
    
    49
    
    
    
    35
    
    
    
    8,516Equity Securities
    
    
    511
    
    
    
    481
    
    
    
    
    
    
    
    992Corporate Bond (3)
    
    
    364
    
    
    
    40
    
    
    
    
    
    
    
    404$
    214,554
    
    
    $
    4,204
    
    
    $
    821
    
    
    $
    217,937December 31, 2008:Mortgage-Backed Securities (1)
    
    $
    77,515
    
    
    $
    1,536
    
    
    $
    191
    
    
    $
    78,860Municipal Bonds
    
    
    58,987
    
    
    
    413
    
    
    
    1,087
    
    
    
    58,313U.S. Government Agency Securities
    
    
    17,580
    
    
    
    120
    
    
    
    
    
    
    
    17,700Collateralized Mortgage Obligations (2)
    
    
    36,204
    
    
    
    137
    
    
    
    179
    
    
    
    36,162Other Securities
    
    
    4,684
    
    
    
    386
    
    
    
    112
    
    
    
    4,958Equity Securities
    
    
    511
    
    
    
    293
    
    
    
    
    
    
    
    804Corporate Bond (3)
    
    
    355
    
    
    
    
    
    
    
    186
    
    
    
    169$
    195,836
    
    
    $
    2,885
    
    
    $
    1,755
    
    
    $
    196,966
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government
sponsored entities.(2)
    
    Collateralized by residential mortgages and guaranteed by U.S. government
sponsored entities, except for two private-label securities held as of December 31,
2008 with an unrealized loss totaling $42,000. The two private-label securities were
sold during the three months ended March 31, 2009.(3)
    
    Balances presented for amortized cost, representing one corporate bond, were
net of an OTTI charge of $2.4 million, which was related to a credit loss, as of June
30, 2009 and December 31, 2008. Therefore, the adoption of FSP Nos. FAS 115-2 and FAS
124-2 did not require a reclassification for the non-credit portion of previously
recognized OTTI from the opening balance of retained earnings to other comprehensive
income as of March 31, 2009.  Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In Thousands)Within One Year
    
    $
    9,562
    
    
    $
    10,190
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    2,540
    
    
    
    2,645
    
    
    
    
    
    
    
    Over Five Years Through Ten Years
    
    
    29,978
    
    
    
    29,961
    
    
    
    695
    
    
    
    695Over Ten Years
    
    
    69,952
    
    
    
    70,945
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    83,825
    
    
    
    84,707
    
    
    
    191
    
    
    
    192Collateralized Mortgage Obligations
    
    
    18,186
    
    
    
    18,497
    
    
    
    
    
    
    
    Equity Securities
    
    
    511
    
    
    
    992
    
    
    
    
    
    
    
    $
    214,554
    
    
    $
    217,937
    
    
    $
    886
    
    
    $
    887
 14




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 4  INVESTMENT SECURITIES (Continued)
 Accounting for Certain Investments in Debt and Equity
Securities, The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments,
  Holding PeriodLess than 12 Months
    
    
    12 Months or More
    
    
    TotalInvestment
    
    Gross
    
    
    
    
    
    
    Number
    
    
    Gross
    
    
    
    
    
    
    Number
    
    
    Gross
    
    
    
    
    
    
    NumberSecurities
    
    Unrealized
    
    
    Estimated
    
    
    of
    
    
    Unrealized
    
    
    Estimated
    
    
    of
    
    
    Unrealized
    
    
    Estimated
    
    
    ofAvailable for Sale
    
    Losses
    
    
    Fair Value
    
    
    Securities
    
    
    Losses
    
    
    Fair Value
    
    
    Securities
    
    
    Losses
    
    
    Fair Value
    
    
    Securities(Dollars in Thousands)June 30, 2009:Mortgage-Backed
Securities
    
    $
    232
    
    
    $
    25,485
    
    
    
    11
    
    
    $
    2
    
    
    $
    821
    
    
    
    2
    
    
    $
    234
    
    
    $
    26,306
    
    
    
    13Municipal Bonds
    
    
    3
    
    
    
    899
    
    
    
    2
    
    
    
    68
    
    
    
    3,881
    
    
    
    9
    
    
    
    71
    
    
    
    4,780
    
    
    
    11U.S. Government
Agency Securities
    
    
    405
    
    
    
    29,589
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    405
    
    
    
    29,589
    
    
    
    5Collateralized
Mortgage
Obligations
    
    
    2
    
    
    
    2,572
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2,572
    
    
    
    1Asset-Backed
Securities
    
    
    35
    
    
    
    5,600
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    5,600
    
    
    
    1Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    2,926
    
    
    
    3
    
    
    
    74
    
    
    
    2,926
    
    
    
    3$
    677
    
    
    $
    64,145
    
    
    
    20
    
    
    $
    144
    
    
    $
    7,628
    
    
    
    14
    
    
    $
    821
    
    
    $
    71,773
    
    
    
    34December 31, 2008:Mortgage-Backed
Securities
    
    $
    158
    
    
    $
    10,631
    
    
    
    42
    
    
    $
    33
    
    
    $
    5,277
    
    
    
    4
    
    
    $
    191
    
    
    $
    15,908
    
    
    
    46Municipal Bonds
    
    
    968
    
    
    
    35,614
    
    
    
    66
    
    
    
    119
    
    
    
    1,749
    
    
    
    4
    
    
    
    1,087
    
    
    
    37,363
    
    
    
    70Collateralized
Mortgage
Obligations
    
    
    36
    
    
    
    4,569
    
    
    
    4
    
    
    
    143
    
    
    
    5,903
    
    
    
    4
    
    
    
    179
    
    
    
    10,472
    
    
    
    8Other Securities
    
    
    72
    
    
    
    929
    
    
    
    1
    
    
    
    40
    
    
    
    1,960
    
    
    
    2
    
    
    
    112
    
    
    
    2,889
    
    
    
    3Corporate Bond
    
    
    186
    
    
    
    169
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186
    
    
    
    169
    
    
    
    1$
    1,420
    
    
    $
    51,912
    
    
    
    114
    
    
    $
    335
    
    
    $
    14,889
    
    
    
    14
    
    
    $
    1,755
    
    
    $
    66,801
    
    
    
    128
   15




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 4  INVESTMENT SECURITIES (Continued)
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In Thousands)Gross Realized Gains on Sales of Investment Securities
    
    $
    1
    
    
    $
    
    
    
    $
    1,277
    
    
    $
    618Gross Realized Losses on Sales of Investment Securities
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    Net Realized Gains on Sales of Investment Securities
    
    $
    1
    
    
    $
    
    
    
    $
    1,168
    
    
    $
    618
  NOTE 5  LOANS
 Loans Receivable
  June 30,
    
    
    December 31,2009
    
    
    2008(In Thousands)Real Estate Loans:Commercial Property
    
    $
    892,568
    
    
    $
    908,970Construction
    
    
    159,091
    
    
    
    178,783Residential Property
    
    
    85,736
    
    
    
    92,361Total Real Estate Loans
    
    
    1,137,395
    
    
    
    1,180,114Commercial and Industrial Loans:Commercial Term Loans
    
    
    1,532,251
    
    
    
    1,611,449Commercial Lines of Credit
    
    
    161,542
    
    
    
    214,699SBA Loans
    
    
    140,274
    
    
    
    140,989International Loans
    
    
    77,492
    
    
    
    95,185Total Commercial and Industrial Loans
    
    
    1,911,559
    
    
    
    2,062,322Consumer Loans
    
    
    76,098
    
    
    
    83,525Total Gross Loans
    
    
    3,125,052
    
    
    
    3,325,961Deferred Loan Fees
    
    
    (1,362
    )
    
    
    (1,260
    )Allowance for Loan Losses
    
    
    (105,268
    )
    
    
    (70,986
    )Loans Receivable, Net
    
    $
    3,018,422
    
    
    $
    3,253,715
 16




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 5  LOANS (Continued)
  Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
  As of and for the
    
    
    As of and for theThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    March 31,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008(In Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    104,943
    
    
    $
    70,986
    
    
    $
    52,986
    
    
    $
    70,986
    
    
    $
    43,611Actual Charge-Offs
    
    
    (24,332
    )
    
    
    (12,516
    )
    
    
    (8,656
    )
    
    
    (36,848
    )
    
    
    (16,508
    )Recoveries on Loans Previously Charged Off
    
    
    735
    
    
    
    703
    
    
    
    436
    
    
    
    1,438
    
    
    
    991Net Loan Charge-Offs
    
    
    (23,597
    )
    
    
    (11,813
    )
    
    
    (8,220
    )
    
    
    (35,410
    )
    
    
    (15,517
    )Provision Charged to Operating Expenses
    
    
    23,922
    
    
    
    45,770
    
    
    
    18,211
    
    
    
    69,692
    
    
    
    34,883Balance at End of Period
    
    $
    105,268
    
    
    $
    104,943
    
    
    $
    62,977
    
    
    $
    105,268
    
    
    $
    62,977Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    4,279
    
    
    $
    4,096
    
    
    $
    2,914
    
    
    $
    4,096
    
    
    $
    1,765Provision Charged to Operating Expenses
    
    
    12
    
    
    
    183
    
    
    
    1,018
    
    
    
    195
    
    
    
    2,167Balance at End of Period
    
    $
    4,291
    
    
    $
    4,279
    
    
    $
    3,932
    
    
    $
    4,291
    
    
    $
    3,932
 Impaired Loans
  June 30,
    
    
    December 31,2009
    
    
    2008(In Thousands)Recorded Investment With Related Allowance
    
    $
    122,242
    
    
    $
    71,448Recorded Investment With No Related Allowance
    
    
    65,597
    
    
    
    49,945Allowance on Impaired Loans
    
    
    (20,279
    )
    
    
    (18,157
    )Net Recorded Investment in Impaired Loans
    
    $
    167,560
    
    
    $
    103,236
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In Thousands)Interest Income That Would Have Been Recognized Had
Impaired
Loans Performed in Accordance With Their Original Terms
    
    $
    6,653
    
    
    $
    4,433
    
    
    $
    11,830
    
    
    $
    6,400Less: Interest Income Recognized on Impaired Loans
    
    
    (3,604
    )
    
    
    (631
    )
    
    
    (5,259
    )
    
    
    (879
    )Interest Foregone on Impaired Loans
    
    $
    3,049
    
    
    $
    3,802
    
    
    $
    6,571
    
    
    $
    5,521
 17




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 5  LOANS (Continued)
  Non-Performing Assets
  June 30,
    
    
    December 31,2009
    
    
    2008(In Thousands)Non-Accrual Loans
    
    $
    167,255
    
    
    $
    120,823Loans 90 Days or More Past Due and Still Accruing
    
    
    41
    
    
    
    1,075Total Non-Performing Loans
    
    
    167,296
    
    
    
    121,898Other Real Estate Owned, Net
    
    
    34,018
    
    
    
    823Total Non-Performing Assets
    
    $
    201,314
    
    
    $
    122,721Troubled Debt Restructurings on Accrual Status
    
    $
    55,694
    
    
    $
    
    NOTE 6  SHARE-BASED COMPENSATION
 Share-Based Compensation Expense
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(In Thousands)Share-Based Compensation Expense
    
    $
    247
    
    
    $
    220
    
    
    $
    489
    
    
    $
    507Related Tax Benefits
    
    $
    104
    
    
    $
    93
    
    
    $
    206
    
    
    $
    213
 18




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 6  SHARE-BASED COMPENSATION (Continued)
 Unrecognized Share-Based Compensation Expense
  Unrecognized
    
    
    Average ExpectedExpense
    
    
    Recognition Period(Dollars in Thousands)Stock Option Awards
    
    $
    1,204
    
    
    2.3 yearsRestricted Stock Awards
    
    
    384
    
    
    4.4 yearsTotal Unrecognized Share-Based Compensation Expense
    
    $
    1,588
    
    
    2.8  years
 Share-Based Payment Award Activity
  Weighted-
    
    Weighted-
    
    AggregateAverage
    
    Average
    
    IntrinsicNumber
    
    Exercise
    
    Remaining
    
    Value ofof
    
    Price Per
    
    Contractual
    
    In-the-MoneyShares
    
    Share
    
    Life
    
    Options(Dollars in Thousands, Except Per Share Data)Options Outstanding at Beginning of Period
    
    
    1,186,822
    
    
    $
    13.84
    
    
    6.0 years
    
    $
    Options Granted
    
    
    250,000
    
    
    $
    1.37
    
    
    9.8 yearsOptions Expired
    
    
    (67,305
    )
    
    $
    15.30
    
    
    5.7 yearsOptions Forfeited
    
    
    (13,600
    )
    
    $
    20.14
    
    
    7.1 yearsOptions Outstanding at End of Period
    
    
    1,355,917
    
    
    $
    11.41
    
    
    6.5 years
    
    $
    96
    (1)Options Exercisable at End of Period
    
    
    820,406
    
    
    $
    13.34
    
    
    5.0 years
    
    $
    
 
 (1)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $1.75 as of June 30, 2009, over the exercise
price, multiplied by the number of options.  Weighted-
    
    Weighted-
    
    AggregateAverage
    
    Average
    
    IntrinsicNumber
    
    Exercise
    
    Remaining
    
    Value ofof
    
    Price Per
    
    Contractual
    
    In-the-MoneyShares
    
    Share
    
    Life
    
    Options(Dollars in Thousands, Except Per Share Data)Options Outstanding at Beginning of Period
    
    
    1,323,467
    
    
    $
    14.05
    
    
    6.3 years
    
    $
    Options Granted
    
    
    250,000
    
    
    $
    1.37
    
    
    9.8 yearsOptions Expired
    
    
    (138,350
    )
    
    $
    15.20
    
    
    5.5 yearsOptions Forfeited
    
    
    (79,200
    )
    
    $
    17.31
    
    
    7.0 yearsOptions Outstanding at End of Period
    
    
    1,355,917
    
    
    $
    11.41
    
    
    6.5 years
    
    $
    96
    (1)Options Exercisable at End of Period
    
    
    820,406
    
    
    $
    13.34
    
    
    5.0 years
    
    $
    
 
 (1)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $1.75 as of June 30, 2009, over the exercise
price, multiplied by the number of options.  19




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 6  SHARE-BASED COMPENSATION (Continued)
 Restricted Stock Awards
  Three Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2009Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageNumber
    
    
    Grant Date
    
    
    Number
    
    
    Grant Dateof
    
    
    Fair Value
    
    
    of
    
    
    Fair ValueShares
    
    
    Per Share
    
    
    Shares
    
    
    Per ShareRestricted Stock at Beginning of Period
    
    
    16,200
    
    
    $
    10.25
    
    
    
    20,200
    
    
    $
    11.42Restricted Stock Granted
    
    
    190,000
    
    
    $
    1.38
    
    
    
    190,000
    
    
    $
    1.38Restricted Stock Forfeited
    
    
    
    
    
    $
    
    
    
    
    (4,000
    )
    
    $
    16.15Restricted Stock at End of Period
    
    
    206,200
    
    
    $
    2.09
    
    
    
    206,200
    
    
    $
    2.09
 NOTE 7  EARNINGS (LOSS) PER SHARE
   2009
    
    
    2008(Numerator)
    
    
    (Denominator)
    
    
    
    
    
    
    (Numerator)
    
    
    (Denominator)Weighted-
    
    
    Per
    
    
    
    
    
    
    Weighted-
    
    
    PerNet
    
    
    Average
    
    
    Share
    
    
    Net
    
    
    Average
    
    
    ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Shares
    
    
    Amount(Dollars in Thousands, Except Per Share Data)Three Months Ended June 30:Basic EPS
    
    $
    (9,535
    )
    
    
    45,924,767
    
    
    $
    (0.21
    )
    
    $
    (105,547
    )
    
    
    45,881,549
    
    
    $
    (2.30
    )Effect of Dilutive Securities  Options, Warrants
and Unvested Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
    
    $
    (9,535
    )
    
    
    45,924,767
    
    
    $
    (0.21
    )
    
    $
    (105,547
    )
    
    
    45,881,549
    
    
    $
    (2.30
    )Six Months Ended June 30:Basic EPS
    
    $
    (26,731
    )
    
    
    45,907,998
    
    
    $
    (0.58
    )
    
    $
    (102,626
    )
    
    
    45,861,963
    
    
    $
    (2.24
    )Effect of Dilutive Securities  Options, Warrants
and Unvested Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
    
    $
    (26,731
    )
    
    
    45,907,998
    
    
    $
    (0.58
    )
    
    $
    (102,626
    )
    
    
    45,861,963
    
    
    $
    (2.24
    )
  20




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 8  OFF-BALANCE SHEET COMMITMENTS
   June 30,
    
    
    December 31,2009
    
    
    2008(In Thousands)Commitments to Extend Credit
    
    $
    349,643
    
    
    $
    386,785Standby Letters of Credit
    
    
    41,884
    
    
    
    47,289Commercial Letters of Credit
    
    
    27,773
    
    
    
    29,177Unused Credit Card Lines
    
    
    22,727
    
    
    
    16,912Total Undisbursed Loan Commitments
    
    $
    442,027
    
    
    $
    480,163
 NOTE 9  SEGMENT REPORTING
  NOTE 10  REGULATORY MATTERS
 Memorandum of Understanding
  21




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 10  REGULATORY MATTERS (Continued)
    Capital Plan
  Government Programs
   22




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Continued)
 NOTE 11  SUBSEQUENT EVENTS
 Possible Future Regulatory Actions
 Note 10  Regulatory Matters.
 Securities Purchase Agreement
    23




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
 Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
 
    
    failure to maintain adequate levels of capital and liquidity to support our operations;
    
    a significant number of our customers failing to perform under their loans and other
terms of credit agreements;
    
    the effect of regulatory orders we have entered into and potential future regulatory
enforcement action against us or the Bank;
    
    fluctuations in interest rates and a decline in the level of our interest rate spread;
    
    failure to attract or retain deposits;
    
    sources of liquidity available to us and to the Bank becoming limited or our potential
inability to access sufficient sources of liquidity when needed or the requirement that we
obtain government waivers to do so;
    
    adverse changes in domestic or global financial markets, economic conditions or
business conditions or the effects of pandemic flu;
    
    regulatory restrictions on the Banks ability to pay dividends to us and on our ability
to make payments on Hanmi Financial obligations;
    
    significant reliance on loans secured by real estate and the associated vulnerability
to downturns in the local real estate market, natural disasters and other variables
impacting the value of real estate;
    
    failure to retain our key employees;
    
    failure to maintain our status as a financial holding company;
    
    adequacy of our allowance for loan losses;
    
    credit quality and the effect of credit quality on our provision for credit losses and
allowance for loan losses;
    
    failure to manage our future growth or successfully integrate acquisitions;
    
    volatility and disruption in financial, credit and securities markets, and the price of
our common stock;
    
    deterioration in the financial markets that may result in other-than-temporary
impairment charges relating to our securities portfolio;
    
    competition in our primary market areas;
    
    demographic changes in our primary market areas; and
    
    significant government regulations, legislation and potential changes thereto.
 24




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##### Table of Contents



Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations Item 1A. Risk Factors. Item 1A. Risk Factors Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
 CRITICAL ACCOUNTING POLICIES
 Notes to Consolidated Financial Statements Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Critical Accounting Policies
 25




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SELECTED FINANCIAL DATA
  As of and for theThree Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(Dollars in Thousands, Except Per Share Data)AVERAGE BALANCES:Average Gross Loans, Net (1)
    
    $
    3,282,152
    
    
    $
    3,317,061
    
    
    $
    3,315,434
    
    
    $
    3,310,101Average Investment Securities
    
    $
    179,129
    
    
    $
    296,790
    
    
    $
    180,698
    
    
    $
    319,457Average Interest-Earning Assets
    
    $
    3,786,788
    
    
    $
    3,657,676
    
    
    $
    3,796,434
    
    
    $
    3,673,663Average Total Assets
    
    $
    3,897,158
    
    
    $
    3,920,796
    
    
    $
    3,922,648
    
    
    $
    3,944,199Average Deposits
    
    $
    3,223,309
    
    
    $
    2,882,506
    
    
    $
    3,212,728
    
    
    $
    2,938,910Average Borrowings
    
    $
    386,477
    
    
    $
    621,239
    
    
    $
    413,117
    
    
    $
    587,189Average Interest-Bearing Liabilities
    
    $
    3,083,774
    
    
    $
    2,851,021
    
    
    $
    3,099,465
    
    
    $
    2,874,115Average Stockholders Equity
    
    $
    240,207
    
    
    $
    377,096
    
    
    $
    252,658
    
    
    $
    378,030Average Tangible Equity (2)
    
    $
    235,850
    
    
    $
    264,710
    
    
    $
    248,092
    
    
    $
    264,943PER SHARE DATA:Earnings (Loss) Per Share  Basic
    
    $
    (0.21
    )
    
    $
    (2.30
    )
    
    $
    (0.58
    )
    
    $
    (2.24
    )Earnings (Loss) Per Share  Diluted
    
    $
    (0.21
    )
    
    $
    (2.30
    )
    
    $
    (0.58
    )
    
    $
    (2.24
    )Common Shares Outstanding
    
    
    46,130,967
    
    
    
    45,900,549
    
    
    
    46,130,967
    
    
    
    45,900,549Book Value Per Share (3)
    
    $
    5.18
    
    
    $
    5.70
    
    
    $
    5.18
    
    
    $
    5.70Tangible Book Value Per Share (4)
    
    $
    5.09
    
    
    $
    5.57
    
    
    $
    5.09
    
    
    $
    5.57Cash Dividends Per Share
    
    $
    
    
    
    $
    0.03
    
    
    $
    
    
    
    $
    0.09SELECTED PERFORMANCE RATIOS:Return on Average Assets (5) (6)
    
    
    (0.98
    %)
    
    
    (10.83
    %)
    
    
    (1.37
    %)
    
    
    (5.23
    %)Return on Average Stockholders Equity (5) (7)
    
    
    (15.92
    %)
    
    
    (112.57
    %)
    
    
    (21.34
    %)
    
    
    (54.59
    %)Return on Average Tangible Equity (5) (8)
    
    
    (16.22
    %)
    
    
    (160.37
    %)
    
    
    (21.73
    %)
    
    
    (77.90
    %)Efficiency Ratio (9)
    
    
    82.85
    %
    
    
    296.07
    %
    
    
    70.04
    %
    
    
    172.25
    %Net Interest Spread (10)
    
    
    1.90
    %
    
    
    2.99
    %
    
    
    1.90
    %
    
    
    2.92
    %Net Interest Margin (11)
    
    
    2.49
    %
    
    
    3.79
    %
    
    
    2.49
    %
    
    
    3.78
    %Dividend Payout Ratio (12)
    
    
    
    
    
    
    (1.30
    %)
    
    
    
    
    
    
    (4.03
    %)Average Stockholders Equity to Average Total Assets
    
    
    6.16
    %
    
    
    9.62
    %
    
    
    6.44
    %
    
    
    9.58
    %SELECTED CAPITAL RATIOS:(13)Total Risk-Based Capital Ratio:Hanmi Financial
    
    
    10.72
    %
    
    
    10.66
    %Hanmi Bank
    
    
    10.70
    %
    
    
    10.64
    %Tier 1 Risk-Based Capital Ratio:Hanmi Financial
    
    
    9.43
    %
    
    
    9.40
    %Hanmi Bank
    
    
    9.42
    %
    
    
    9.39
    %Tier 1 Leverage Ratio:Hanmi Financial
    
    
    8.02
    %
    
    
    8.61
    %Hanmi Bank
    
    
    8.01
    %
    
    
    8.60
    %SELECTED ASSET QUALITY RATIOS:Non-Performing Loans to Total Gross Loans (14)
    
    
    5.30
    %
    
    
    3.34
    %
    
    
    5.30
    %
    
    
    3.34
    %Non-Performing Assets to Total Assets (15)
    
    
    5.20
    %
    
    
    2.92
    %
    
    
    5.20
    %
    
    
    2.92
    %Net Loan Charge-Offs to Average Total Gross Loans (16)
    
    
    2.88
    %
    
    
    1.00
    %
    
    
    2.15
    %
    
    
    0.94
    %Allowance for Loan Losses to Total Gross Loans
    
    
    3.33
    %
    
    
    1.88
    %
    
    
    3.33
    %
    
    
    1.88
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    62.92
    %
    
    
    56.14
    %
    
    
    62.92
    %
    
    
    56.14
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs.(2)
    
    Average tangible equity is calculated by subtracting average goodwill and average
other intangible assets from average stockholders equity. See Non-GAAP Financial Measures.(3)
    
    Total stockholders equity divided by common shares outstanding.(4)
    
    Tangible equity divided by common shares outstanding. See Non-GAAP Financial Measures.(5)
    
    Calculation based upon annualized net loss.(6)
    
    Net loss divided by average total assets.(7)
    
    Net loss divided by average stockholders equity.(8)
    
    Net loss divided by average tangible equity. See Non-GAAP Financial Measures.(9)
    
    Total non-interest expenses divided by the sum of net interest income before provision for credit losses and total non-interest income.(10)
    
    Average yield earned on interest-earning assets less average rate paid on
interest-bearing liabilities. Computed on a tax-equivalent basis using an effective marginal
rate of 35 percent.(11)
    
    Net interest income before provision for credit losses divided by average
interest-earning assets. Computed on a tax-equivalent basis using an effective marginal rate
of 35 percent.(12)
    
    Cash dividends per share times common shares outstanding divided by net loss.(13)
    
    The required ratios for a well-capitalized institution, as defined by regulations
of the Board of Governors of the Federal Reserve System, are 10 percent for the Total
Risk-Based Capital Ratio (total capital divided by total risk-weighted assets); 6 percent for
the Tier 1 Risk-Based Capital Ratio (Tier 1 capital divided by total risk-weighted assets);
and 5 percent for the Tier 1 Leverage Ratio (Tier 1 capital divided by average total assets).(14)
    
    Non-performing loans consist of non-accrual loans and loans past due 90 days or more and still accruing interest.(15)
    
    Non-performing assets consist of non-performing loans (see footnote (14) above) and other real estate owned.(16)
    
    Calculation based upon annualized net loan charge-offs. 26




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##### Table of Contents



Non-GAAP Financial Measures
 Return on Average Tangible Equity
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)Average Stockholders Equity
    
    $
    240,207
    
    
    $
    377,096
    
    
    $
    252,658
    
    
    $
    378,030Less Average Goodwill and Average Other Intangible Assets
    
    
    (4,357
    )
    
    
    (112,386
    )
    
    
    (4,566
    )
    
    
    (113,087
    )Average Tangible Equity
    
    $
    235,850
    
    
    $
    264,710
    
    
    $
    248,092
    
    
    $
    264,943Return on Average Stockholders Equity
    
    
    (15.92
    %)
    
    
    (112.57
    %)
    
    
    (21.34
    %)
    
    
    (54.59
    %)Effect of Average Goodwill and Average Other Intangible Assets
    
    
    (0.30
    %)
    
    
    (47.80
    %)
    
    
    (0.39
    %)
    
    
    (23.31
    %)Return on Average Tangible Equity
    
    
    (16.22
    %)
    
    
    (160.37
    %)
    
    
    (21.73
    %)
    
    
    (77.90
    %)
 Tangible Book Value Per Share
   June 30,2009
    
    
    2008(Dollars in Thousands,Except Per Share Data)Total Stockholders Equity
    
    $
    239,126
    
    
    $
    261,505Less Goodwill and Other Intangible Assets
    
    
    (4,115
    )
    
    
    (5,882
    )Tangible Equity
    
    $
    235,011
    
    
    $
    255,623Book Value Per Share
    
    $
    5.18
    
    
    $
    5.70Effect of Goodwill and Other Intangible Assets
    
    
    (0.09
    )
    
    
    (0.13
    )Tangible Book Value Per Share
    
    $
    5.09
    
    
    $
    5.57
 27




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##### Table of Contents



EXECUTIVE OVERVIEW
      28




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##### Table of Contents



RESULTS OF OPERATIONS
 Net Interest Income Before Provision for Credit Losses
   Three Months Ended June 30, 2009 vs. Three Months Ended June 30, 2008
  29




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##### Table of Contents



Three Months EndedJune 30, 2009
    
    
    June 30, 2008Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-Earning Assets:Gross Loans, Net (1)
    
    $
    3,282,152
    
    
    $
    44,718
    
    
    
    5.46
    %
    
    $
    3,317,061
    
    
    $
    55,905
    
    
    
    6.78
    %Municipal Securities (2)
    
    
    59,222
    
    
    
    956
    
    
    
    6.46
    %
    
    
    63,177
    
    
    
    1,018
    
    
    
    6.45
    %Obligations of Other U.S. Government Agencies
    
    
    13,177
    
    
    
    144
    
    
    
    4.37
    %
    
    
    84,088
    
    
    
    884
    
    
    
    4.21
    %Other Debt Securities
    
    
    106,730
    
    
    
    1,226
    
    
    
    4.59
    %
    
    
    149,525
    
    
    
    1,694
    
    
    
    4.53
    %Equity Securities (5)
    
    
    41,532
    
    
    
    153
    
    
    
    1.47
    %
    
    
    38,031
    
    
    
    486
    
    
    
    5.11
    %Federal Funds Sold and Securities Purchased Under
Resale Agreements
    
    
    135,362
    
    
    
    112
    
    
    
    0.33
    %
    
    
    5,621
    
    
    
    31
    
    
    
    2.21
    %Term Federal Funds Sold
    
    
    147,692
    
    
    
    695
    
    
    
    1.88
    %
    
    
    
    
    
    
    
    
    
    
    Interest-Earning Deposits
    
    
    921
    
    
    
    11
    
    
    
    4.78
    %
    
    
    173
    
    
    
    1
    
    
    
    2.31
    %Total Interest-Earning Assets (2)
    
    
    3,786,788
    
    
    
    48,015
    
    
    
    5.09
    %
    
    
    3,657,676
    
    
    
    60,019
    
    
    
    6.60
    %Noninterest-Earning Assets:Cash and Cash Equivalents
    
    
    78,781
    
    
    
    
    
    
    
    
    
    
    
    85,600Allowance for Loan Losses
    
    
    (115,116
    )
    
    
    
    
    
    
    
    
    
    
    (52,685
    )Other Assets
    
    
    146,705
    
    
    
    
    
    
    
    
    
    
    
    230,205Total Noninterest-Earning Assets
    
    
    110,370
    
    
    
    
    
    
    
    
    
    
    
    263,120TOTAL ASSETS
    
    $
    3,897,158
    
    
    
    
    
    
    
    
    
    
    $
    3,920,796LIABILITIES AND STOCKHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings
    
    $
    84,588
    
    
    
    527
    
    
    
    2.50
    %
    
    $
    91,803
    
    
    
    527
    
    
    
    2.31
    %Money Market Checking and NOW Accounts
    
    
    319,319
    
    
    
    1,426
    
    
    
    1.79
    %
    
    
    718,257
    
    
    
    5,707
    
    
    
    3.20
    %Time Deposits of $100,000 or More
    
    
    1,313,683
    
    
    
    12,108
    
    
    
    3.70
    %
    
    
    1,098,990
    
    
    
    11,040
    
    
    
    4.04
    %Other Time Deposits
    
    
    979,707
    
    
    
    8,625
    
    
    
    3.53
    %
    
    
    320,732
    
    
    
    3,213
    
    
    
    4.03
    %Federal Home Loan Bank Advances
    
    
    302,220
    
    
    
    1,010
    
    
    
    1.34
    %
    
    
    536,412
    
    
    
    3,929
    
    
    
    2.95
    %Other Borrowings
    
    
    1,851
    
    
    
    2
    
    
    
    0.43
    %
    
    
    2,421
    
    
    
    15
    
    
    
    2.49
    %Junior Subordinated Debentures
    
    
    82,406
    
    
    
    846
    
    
    
    4.12
    %
    
    
    82,406
    
    
    
    1,164
    
    
    
    5.68
    %Total Interest-Bearing Liabilities
    
    
    3,083,774
    
    
    
    24,544
    
    
    
    3.19
    %
    
    
    2,851,021
    
    
    
    25,595
    
    
    
    3.61
    %Noninterest-Bearing Liabilities:Demand Deposits
    
    
    526,012
    
    
    
    
    
    
    
    
    
    
    
    652,724Other Liabilities
    
    
    47,165
    
    
    
    
    
    
    
    
    
    
    
    39,955Total Noninterest-Bearing Liabilities
    
    
    573,177
    
    
    
    
    
    
    
    
    
    
    
    692,679Total Liabilities
    
    
    3,656,951
    
    
    
    
    
    
    
    
    
    
    
    3,543,700Stockholders Equity
    
    
    240,207
    
    
    
    
    
    
    
    
    
    
    
    377,096TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,897,158
    
    
    
    
    
    
    
    
    
    
    $
    3,920,796NET INTEREST INCOME
    
    
    
    
    
    $
    23,471
    
    
    
    
    
    
    
    
    
    
    $
    34,424NET INTEREST SPREAD(2)(3)
    
    
    
    
    
    
    
    
    
    
    1.90
    %
    
    
    
    
    
    
    
    
    
    
    2.99
    %NET INTEREST MARGIN(2)(4)
    
    
    
    
    
    
    
    
    
    
    2.49
    %
    
    
    
    
    
    
    
    
    
    
    3.79
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs, but excluding the allowance
for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have
been included in the calculation of interest income. Loan fees were $504,000 and $851,000 for
the three months ended June 30, 2009 and 2008, respectively.(2)
    
    Computed on a tax-equivalent basis using an effective marginal rate of 35 percent.(3)
    
    Represents the average rate earned on interest-earning assets less the average rate
paid on interest-bearing liabilities.(4)
    
    Represents annualized net interest income as a percentage of average
interest-earning assets.(5)
    
    Includes investment in Federal Home Loan Bank stock and investment in Federal
Reserve Bank stock. Beginning with the first quarter of 2009, the Federal Home Loan Bank
ceased paying dividends.  30




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##### Table of Contents



Three Months Ended June 30, 2009 vs.Three Months Ended June 30, 2008Increases (Decreases) Due to Change inVolume
    
    
    Rate
    
    
    Total(In Thousands)Interest and Dividend Income:Gross Loans, Net
    
    $
    (576
    )
    
    $
    (10,611
    )
    
    $
    (11,187
    )Municipal Securities
    
    
    (64
    )
    
    
    2
    
    
    
    (62
    )Obligations of Other U.S. Government Agencies
    
    
    (774
    )
    
    
    34
    
    
    
    (740
    )Other Debt Securities
    
    
    (492
    )
    
    
    24
    
    
    
    (468
    )Equity Securities
    
    
    41
    
    
    
    (374
    )
    
    
    (333
    )Federal Funds Sold and Securities Purchased Under Resale Agreements
    
    
    128
    
    
    
    (47
    )
    
    
    81Term Federal Funds Sold
    
    
    695
    
    
    
    
    
    
    
    695Interest-Earning Deposits
    
    
    8
    
    
    
    2
    
    
    
    10Total Interest and Dividend Income
    
    
    (1,034
    )
    
    
    (10,970
    )
    
    
    (12,004
    )Interest Expense:Savings
    
    
    (43
    )
    
    
    43
    
    
    
    Money Market Checking and NOW Accounts
    
    
    (2,390
    )
    
    
    (1,891
    )
    
    
    (4,281
    )Time Deposits of $100,000 or More
    
    
    2,056
    
    
    
    (988
    )
    
    
    1,068Other Time Deposits
    
    
    5,856
    
    
    
    (444
    )
    
    
    5,412Federal Home Loan Bank Advances
    
    
    (1,298
    )
    
    
    (1,621
    )
    
    
    (2,919
    )Other Borrowings
    
    
    (3
    )
    
    
    (10
    )
    
    
    (13
    )Junior Subordinated Debentures
    
    
    
    
    
    
    (318
    )
    
    
    (318
    )Total Interest Expense
    
    
    4,178
    
    
    
    (5,229
    )
    
    
    (1,051
    )Change in Net Interest Income
    
    $
    (5,212
    )
    
    $
    (5,741
    )
    
    $
    (10,953
    )
     31




---



##### Table of Contents



Six Months Ended June 30, 2009 vs. Six Months Ended June 30, 2008
  Six Months EndedJune 30, 2009
    
    
    June 30, 2008Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-Earning Assets:Gross Loans, Net (1)
    
    $
    3,315,434
    
    
    $
    89,803
    
    
    
    5.46
    %
    
    $
    3,310,101
    
    
    $
    116,503
    
    
    
    7.08
    %Municipal Securities (2)
    
    
    59,055
    
    
    
    1,945
    
    
    
    6.59
    %
    
    
    67,528
    
    
    
    2,186
    
    
    
    6.47
    %Obligations of Other U.S. Government Agencies
    
    
    11,387
    
    
    
    240
    
    
    
    4.22
    %
    
    
    96,974
    
    
    
    2,129
    
    
    
    4.39
    %Other Debt Securities
    
    
    110,256
    
    
    
    2,480
    
    
    
    4.50
    %
    
    
    154,955
    
    
    
    3,565
    
    
    
    4.60
    %Equity Securities (5)
    
    
    41,629
    
    
    
    306
    
    
    
    1.47
    %
    
    
    35,760
    
    
    
    900
    
    
    
    5.03
    %Federal Funds Sold and Securities Purchased Under
Resale Agreements
    
    
    115,086
    
    
    
    194
    
    
    
    0.34
    %
    
    
    8,258
    
    
    
    114
    
    
    
    2.76
    %Term Federal Funds Sold
    
    
    143,044
    
    
    
    1,395
    
    
    
    1.95
    %
    
    
    
    
    
    
    
    
    
    
    Interest-Earning Deposits
    
    
    543
    
    
    
    13
    
    
    
    4.79
    %
    
    
    87
    
    
    
    1
    
    
    
    2.30
    %Total Interest-Earning Assets (2)
    
    
    3,796,434
    
    
    
    96,376
    
    
    
    5.12
    %
    
    
    3,673,663
    
    
    
    125,398
    
    
    
    6.86
    %Noninterest-Earning Assets:Cash and Cash Equivalents
    
    
    81,402
    
    
    
    
    
    
    
    
    
    
    
    89,727Allowance for Loan Losses
    
    
    (93,851
    )
    
    
    
    
    
    
    
    
    
    
    (47,615
    )Other Assets
    
    
    138,663
    
    
    
    
    
    
    
    
    
    
    
    228,424Total Noninterest-Earning Assets
    
    
    126,214
    
    
    
    
    
    
    
    
    
    
    
    270,536TOTAL ASSETS
    
    $
    3,922,648
    
    
    
    
    
    
    
    
    
    
    $
    3,944,199LIABILITIES AND STOCKHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings
    
    $
    83,315
    
    
    
    1,032
    
    
    
    2.50
    %
    
    $
    92,135
    
    
    
    1,054
    
    
    
    2.30
    %Money Market Checking and NOW Accounts
    
    
    331,270
    
    
    
    3,280
    
    
    
    2.00
    %
    
    
    637,875
    
    
    
    10,367
    
    
    
    3.27
    %Time Deposits of $100,000 or More
    
    
    1,196,816
    
    
    
    22,430
    
    
    
    3.78
    %
    
    
    1,226,728
    
    
    
    26,727
    
    
    
    4.38
    %Other Time Deposits
    
    
    1,074,947
    
    
    
    18,729
    
    
    
    3.51
    %
    
    
    330,188
    
    
    
    7,186
    
    
    
    4.38
    %Federal Home Loan Bank Advances
    
    
    329,056
    
    
    
    2,122
    
    
    
    1.30
    %
    
    
    485,157
    
    
    
    8,082
    
    
    
    3.35
    %Other Borrowings
    
    
    1,655
    
    
    
    2
    
    
    
    0.24
    %
    
    
    19,626
    
    
    
    339
    
    
    
    3.47
    %Junior Subordinated Debentures
    
    
    82,406
    
    
    
    1,834
    
    
    
    4.49
    %
    
    
    82,406
    
    
    
    2,613
    
    
    
    6.38
    %Total Interest-Bearing Liabilities
    
    
    3,099,465
    
    
    
    49,429
    
    
    
    3.22
    %
    
    
    2,874,115
    
    
    
    56,368
    
    
    
    3.94
    %Noninterest-Bearing Liabilities:Demand Deposits
    
    
    526,380
    
    
    
    
    
    
    
    
    
    
    
    651,984Other Liabilities
    
    
    44,145
    
    
    
    
    
    
    
    
    
    
    
    40,070Total Noninterest-Bearing Liabilities
    
    
    570,525
    
    
    
    
    
    
    
    
    
    
    
    692,054Total Liabilities
    
    
    3,669,990
    
    
    
    
    
    
    
    
    
    
    
    3,566,169Stockholders Equity
    
    
    252,658
    
    
    
    
    
    
    
    
    
    
    
    378,030TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,922,648
    
    
    
    
    
    
    
    
    
    
    $
    3,944,199NET INTEREST INCOME
    
    
    
    
    
    $
    46,947
    
    
    
    
    
    
    
    
    
    
    $
    69,030NET INTEREST SPREAD(3)
    
    
    
    
    
    
    
    
    
    
    1.90
    %
    
    
    
    
    
    
    
    
    
    
    2.92
    %NET INTEREST MARGIN(4)
    
    
    
    
    
    
    
    
    
    
    2.49
    %
    
    
    
    
    
    
    
    
    
    
    3.78
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs, but excluding the allowance
for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have
been included in the calculation of interest income. Loan fees were $895,000 and $1.4 million
for the six months ended June 30, 2009 and 2008, respectively.(2)
    
    Computed on a tax-equivalent basis using an effective marginal rate of 35 percent.(3)
    
    Represents the average rate earned on interest-earning assets less the average rate
paid on interest-bearing liabilities.(4)
    
    Represents annualized net interest income as a percentage of average
interest-earning assets.(5)
    
    Includes investment in Federal Home Loan Bank stock and investment in Federal
Reserve Bank stock. Beginning with the first quarter of 2009, the Federal Home Loan Bank
ceased paying dividends. 32




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##### Table of Contents



Six Months Ended June 30, 2009 vs.Six Months Ended June 30, 2008Increases (Decreases) Due to Change inVolume
    
    
    Rate
    
    
    Total(In Thousands)Interest and Dividend Income:Gross Loans, Net
    
    $
    184
    
    
    $
    (26,884
    )
    
    $
    (26,700
    )Municipal Securities
    
    
    (278
    )
    
    
    37
    
    
    
    (241
    )Obligations of Other U.S. Government Agencies
    
    
    (1,807
    )
    
    
    (82
    )
    
    
    (1,889
    )Other Debt Securities
    
    
    (1,007
    )
    
    
    (78
    )
    
    
    (1,085
    )Equity Securities
    
    
    128
    
    
    
    (722
    )
    
    
    (594
    )Federal Funds Sold and Securities Purchased Under Resale Agreements
    
    
    262
    
    
    
    (182
    )
    
    
    80Term Federal Funds Sold
    
    
    1,395
    
    
    
    
    
    
    
    1,395Interest-Earning Deposits
    
    
    10
    
    
    
    2
    
    
    
    12Total Interest and Dividend Income
    
    
    (1,113
    )
    
    
    (27,909
    )
    
    
    (29,022
    )Interest Expense:Savings
    
    
    (107
    )
    
    
    85
    
    
    
    (22
    )Money Market Checking and NOW Accounts
    
    
    (3,917
    )
    
    
    (3,170
    )
    
    
    (7,087
    )Time Deposits of $100,000 or More
    
    
    (648
    )
    
    
    (3,649
    )
    
    
    (4,297
    )Other Time Deposits
    
    
    13,214
    
    
    
    (1,671
    )
    
    
    11,543Federal Home Loan Bank Advances
    
    
    (2,054
    )
    
    
    (3,906
    )
    
    
    (5,960
    )Other Borrowings
    
    
    (167
    )
    
    
    (170
    )
    
    
    (337
    )Junior Subordinated Debentures
    
    
    
    
    
    
    (779
    )
    
    
    (779
    )Total Interest Expense
    
    
    6,321
    
    
    
    (13,260
    )
    
    
    (6,939
    )Change in Net Interest Income
    
    $
    (7,434
    )
    
    $
    (14,649
    )
    
    $
    (22,083
    )
    33




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##### Table of Contents



Provision for Credit Losses
 Non-Performing
Assets Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
 Non-Interest Income
  Three Months Ended June 30, 2009 vs. Three Months Ended June 30, 2008
  Three Months EndedJune 30,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Service Charges on Deposit Accounts
    
    $
    4,442
    
    
    $
    4,539
    
    
    $
    (97
    )
    
    
    (2.1
    %)Insurance Commissions
    
    
    1,185
    
    
    
    1,384
    
    
    
    (199
    )
    
    
    (14.4
    %)Remittance Fees
    
    
    545
    
    
    
    539
    
    
    
    6
    
    
    
    1.1
    %Trade Finance Fees
    
    
    499
    
    
    
    825
    
    
    
    (326
    )
    
    
    (39.5
    %)Other Service Charges and Fees
    
    
    467
    
    
    
    703
    
    
    
    (236
    )
    
    
    (33.6
    %)Bank-Owned Life Insurance Income
    
    
    227
    
    
    
    234
    
    
    
    (7
    )
    
    
    (3.0
    %)Gain on Sales of Investment Securities
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    %Net Gain on Sales of Loans
    
    
    
    
    
    
    552
    
    
    
    (552
    )
    
    
    (100.0
    %)Other Operating Income (Loss)
    
    
    (695
    )
    
    
    876
    
    
    
    (1,571
    )
    
    
    (179.3
    %)Total Non-Interest Income
    
    $
    6,671
    
    
    $
    9,652
    
    
    $
    (2,981
    )
    
    
    (30.9
    %)
   34




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##### Table of Contents



Six Months Ended June 30, 2009 vs. Six Months Ended June 30, 2008
  Three Months EndedJune 30,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Service Charges on Deposit Accounts
    
    $
    8,757
    
    
    $
    9,256
    
    
    $
    (499
    )
    
    
    (5.4
    %)Insurance Commissions
    
    
    2,367
    
    
    
    2,699
    
    
    
    (332
    )
    
    
    (12.3
    %)Remittance Fees
    
    
    1,068
    
    
    
    1,044
    
    
    
    24
    
    
    
    2.3
    %Trade Finance Fees
    
    
    1,005
    
    
    
    1,690
    
    
    
    (685
    )
    
    
    (40.5
    %)Other Service Charges and Fees
    
    
    950
    
    
    
    1,419
    
    
    
    (469
    )
    
    
    (33.1
    %)Bank-Owned Life Insurance Income
    
    
    461
    
    
    
    474
    
    
    
    (13
    )
    
    
    (2.7
    %)Gain on Sales of Investment Securities
    
    
    1,277
    
    
    
    618
    
    
    
    659
    
    
    
    106.6
    %Loss on Sales of Investment Securities
    
    
    (109
    )
    
    
    
    
    
    
    (109
    )
    
    
    
    %Net Gain on Sales of Loans
    
    
    2
    
    
    
    765
    
    
    
    (763
    )
    
    
    (99.7
    %)Other Operating Income (Loss)
    
    
    (727
    )
    
    
    1,452
    
    
    
    (2,179
    )
    
    
    (150.1
    %)Total Non-Interest Income
    
    $
    15,051
    
    
    $
    19,417
    
    
    $
    (4,366
    )
    
    
    (22.5
    %)
     35




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##### Table of Contents



Non-Interest Expense
 Three Months Ended June 30, 2009 vs. Three Months Ended June 30, 2008
  Three Months EndedJune 30,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Salaries and Employee Benefits
    
    $
    8,508
    
    
    $
    11,301
    
    
    $
    (2,793
    )
    
    
    (24.7
    %)Occupancy and Equipment
    
    
    2,788
    
    
    
    2,792
    
    
    
    (4
    )
    
    
    (0.1
    %)Deposit Insurance Premiums and Regulatory Assessments
    
    
    3,929
    
    
    
    758
    
    
    
    3,171
    
    
    
    418.3
    %Data Processing
    
    
    1,547
    
    
    
    1,698
    
    
    
    (151
    )
    
    
    (8.9
    %)Other Real Estate Owned Expense
    
    
    1,502
    
    
    
    
    
    
    
    1,502
    
    
    
    
    %Professional Fees
    
    
    890
    
    
    
    995
    
    
    
    (105
    )
    
    
    (10.6
    %)Loan-Related Expense
    
    
    1,217
    
    
    
    240
    
    
    
    977
    
    
    
    407.1
    %Advertising and Promotion
    
    
    624
    
    
    
    888
    
    
    
    (264
    )
    
    
    (29.7
    %)Supplies and Communications
    
    
    599
    
    
    
    623
    
    
    
    (24
    )
    
    
    (3.9
    %)Amortization of Other Intangible Assets
    
    
    406
    
    
    
    502
    
    
    
    (96
    )
    
    
    (19.1
    %)Other Operating Expenses
    
    
    2,686
    
    
    
    2,253
    
    
    
    433
    
    
    
    19.2
    %Impairment Loss on Goodwill
    
    
    
    
    
    
    107,393
    
    
    
    (107,393
    )
    
    
    (100.0
    %)Total Non-Interest Expense
    
    $
    24,696
    
    
    $
    129,443
    
    
    $
    (104,747
    )
    
    
    (80.9
    %)
     36




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##### Table of Contents



Six Months Ended June 30, 2009 vs. Six Months Ended June 30, 2008
  Six Months EndedJune 30,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Salaries and Employee Benefits
    
    $
    16,011
    
    
    $
    22,581
    
    
    $
    (6,570
    )
    
    
    (29.1
    %)Occupancy and Equipment
    
    
    5,672
    
    
    
    5,574
    
    
    
    98
    
    
    
    1.8
    %Deposit Insurance Premiums and Regulatory Assessments
    
    
    5,419
    
    
    
    1,318
    
    
    
    4,101
    
    
    
    311.2
    %Data Processing
    
    
    3,083
    
    
    
    3,232
    
    
    
    (149
    )
    
    
    (4.6
    %)Other Real Estate Owned Expense
    
    
    1,645
    
    
    
    139
    
    
    
    1,506
    
    
    
    1,083.5
    %Professional Fees
    
    
    1,506
    
    
    
    1,980
    
    
    
    (474
    )
    
    
    (23.9
    %)Loan-Related Expense
    
    
    1,398
    
    
    
    399
    
    
    
    999
    
    
    
    250.4
    %Advertising and Promotion
    
    
    1,193
    
    
    
    1,700
    
    
    
    (507
    )
    
    
    (29.8
    %)Supplies and Communications
    
    
    1,169
    
    
    
    1,327
    
    
    
    (158
    )
    
    
    (11.9
    %)Amortization of Other Intangible Assets
    
    
    835
    
    
    
    1,026
    
    
    
    (191
    )
    
    
    (18.6
    %)Other Operating Expenses
    
    
    5,017
    
    
    
    4,362
    
    
    
    655
    
    
    
    15.0
    %Impairment Loss on Goodwill
    
    
    
    
    
    
    107,393
    
    
    
    (107,393
    )
    
    
    (100.0
    %)Total Non-Interest Expense
    
    $
    42,948
    
    
    $
    151,031
    
    
    $
    (108,083
    )
    
    
    (71.6
    %)
      37




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##### Table of Contents



Provision for Income Taxes
  FINANCIAL CONDITION
 Investment Portfolio
 Accounting for Certain Investments in Debt and Equity Securities.
  June 30, 2009
    
    
    December 31, 2008Estimated
    
    
    Unrealized
    
    
    
    
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Fair
    
    
    Gain
    
    
    Amortized
    
    
    Fair
    
    
    GainCost
    
    
    Value
    
    
    (Loss)
    
    
    Cost
    
    
    Value
    
    
    (Loss)(In Thousands)Investment Securities Held to Maturity:Municipal Bonds
    
    $
    695
    
    
    $
    695
    
    
    $
    
    
    
    $
    695
    
    
    $
    695
    
    
    $
    Mortgage-Backed Securities (1)
    
    
    191
    
    
    
    192
    
    
    
    1
    
    
    
    215
    
    
    
    215
    
    
    
    Total Investment Securities Held to Maturity
    
    $
    886
    
    
    $
    887
    
    
    $
    1
    
    
    $
    910
    
    
    $
    910
    
    
    $
    Investment Securities Available for Sale:Mortgage-Backed Securities (1)
    
    $
    83,825
    
    
    $
    84,707
    
    
    $
    882
    
    
    $
    77,515
    
    
    $
    78,860
    
    
    $
    1,345Municipal Bonds
    
    
    56,712
    
    
    
    58,152
    
    
    
    1,440
    
    
    
    58,987
    
    
    
    58,313
    
    
    
    (674
    )U.S. Government Agency Securities
    
    
    38,324
    
    
    
    37,968
    
    
    
    (356
    )
    
    
    17,580
    
    
    
    17,700
    
    
    
    120Collateralized Mortgage Obligations (2)
    
    
    18,186
    
    
    
    18,497
    
    
    
    311
    
    
    
    36,204
    
    
    
    36,162
    
    
    
    (42
    )Asset-Backed Securities
    
    
    8,502
    
    
    
    8,516
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    Other Securities
    
    
    8,130
    
    
    
    8,701
    
    
    
    571
    
    
    
    4,684
    
    
    
    4,958
    
    
    
    274Equity Securities
    
    
    511
    
    
    
    992
    
    
    
    481
    
    
    
    511
    
    
    
    804
    
    
    
    293Corporate Bond (3)
    
    
    364
    
    
    
    404
    
    
    
    40
    
    
    
    355
    
    
    
    169
    
    
    
    (186
    )Total Investment Securities Available for Sale
    
    $
    214,554
    
    
    $
    217,937
    
    
    $
    3,383
    
    
    $
    195,836
    
    
    $
    196,966
    
    
    $
    1,130
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government sponsored
entities.(2)
    
    Collateralized by residential mortgages and guaranteed by U.S. government sponsored
entities, except for two private-label securities held as of December 31, 2008 with an
unrealized loss totaling $42,000. The two private-label securities were sold during the three
months ended March 31, 2009.(3)
    
    Balances presented for amortized cost, representing one corporate bond, were net
of an OTTI charge of $2.4 million, which was related to a credit loss, as of June 30, 2009 and
December 31, 2008. Therefore, the adoption of FSP Nos. FAS 115-2 and FAS 124-2 did not require
a reclassification for the non-credit portion of previously recognized OTTI from the opening
balance of retained earnings to other comprehensive income as of March 31, 2009. 38




---



##### Table of Contents



Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In Thousands)Within One Year
    
    $
    9,562
    
    
    $
    10,190
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    2,540
    
    
    
    2,645
    
    
    
    
    
    
    
    Over Five Years Through Ten Years
    
    
    29,978
    
    
    
    29,961
    
    
    
    695
    
    
    
    695Over Ten Years
    
    
    69,952
    
    
    
    70,945
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    83,825
    
    
    
    84,707
    
    
    
    191
    
    
    
    192Collateralized Mortgage Obligations
    
    
    18,186
    
    
    
    18,497
    
    
    
    
    
    
    
    Equity Securities
    
    
    511
    
    
    
    992
    
    
    
    
    
    
    
    $
    214,554
    
    
    $
    217,937
    
    
    $
    886
    
    
    $
    887
  Holding PeriodLess than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Number
    
    
    Gross
    
    
    
    
    
    
    Number
    
    
    Gross
    
    
    
    
    
    
    NumberInvestment Securities
    
    Unrealized
    
    
    Estimated
    
    
    of
    
    
    Unrealized
    
    
    Estimated
    
    
    of
    
    
    Unrealized
    
    
    Estimated
    
    
    ofAvailable for Sale
    
    Losses
    
    
    Fair Value
    
    
    Securities
    
    
    Losses
    
    
    Fair Value
    
    
    Securities
    
    
    Losses
    
    
    Fair Value
    
    
    Securities(Dollars in Thousands)June 30, 2009:Mortgage-Backed
Securities
    
    $
    232
    
    
    $
    25,485
    
    
    
    11
    
    
    $
    2
    
    
    $
    821
    
    
    
    2
    
    
    $
    234
    
    
    $
    26,306
    
    
    
    13Municipal Bonds
    
    
    3
    
    
    
    899
    
    
    
    2
    
    
    
    68
    
    
    
    3,881
    
    
    
    9
    
    
    
    71
    
    
    
    4,780
    
    
    
    11U.S. Government
Agency Securities
    
    
    405
    
    
    
    29,589
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    405
    
    
    
    29,589
    
    
    
    5Collateralized
Mortgage
Obligations
    
    
    2
    
    
    
    2,572
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2,572
    
    
    
    1Asset-Backed
Securities
    
    
    35
    
    
    
    5,600
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    5,600
    
    
    
    1Other Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    2,926
    
    
    
    3
    
    
    
    74
    
    
    
    2,926
    
    
    
    3$
    677
    
    
    $
    64,145
    
    
    
    20
    
    
    $
    144
    
    
    $
    7,628
    
    
    
    14
    
    
    $
    821
    
    
    $
    71,773
    
    
    
    34December 31, 2008:Mortgage-Backed
Securities
    
    $
    158
    
    
    $
    10,631
    
    
    
    42
    
    
    $
    33
    
    
    $
    5,277
    
    
    
    4
    
    
    $
    191
    
    
    $
    15,908
    
    
    
    46Municipal Bonds
    
    
    968
    
    
    
    35,614
    
    
    
    66
    
    
    
    119
    
    
    
    1,749
    
    
    
    4
    
    
    
    1,087
    
    
    
    37,363
    
    
    
    70Collateralized
Mortgage
Obligations
    
    
    36
    
    
    
    4,569
    
    
    
    4
    
    
    
    143
    
    
    
    5,903
    
    
    
    4
    
    
    
    179
    
    
    
    10,472
    
    
    
    8Other Securities
    
    
    72
    
    
    
    929
    
    
    
    1
    
    
    
    40
    
    
    
    1,960
    
    
    
    2
    
    
    
    112
    
    
    
    2,889
    
    
    
    3Corporate Bond
    
    
    186
    
    
    
    169
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186
    
    
    
    169
    
    
    
    1$
    1,420
    
    
    $
    51,912
    
    
    
    114
    
    
    $
    335
    
    
    $
    14,889
    
    
    
    14
    
    
    $
    1,755
    
    
    $
    66,801
    
    
    
    128
 39




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##### Table of Contents



Loan Portfolio
  June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Real Estate Loans:Commercial Property
    
    $
    892,568
    
    
    $
    908,970
    
    
    $
    (16,402
    )
    
    
    (1.8
    %)Construction
    
    
    159,091
    
    
    
    178,783
    
    
    
    (19,692
    )
    
    
    (11.0
    %)Residential Property
    
    
    85,736
    
    
    
    92,361
    
    
    
    (6,625
    )
    
    
    (7.2
    %)Total Real Estate Loans
    
    
    1,137,395
    
    
    
    1,180,114
    
    
    
    (42,719
    )
    
    
    (3.6
    %)Commercial and Industrial Loans:Commercial Term Loans
    
    
    1,532,251
    
    
    
    1,611,449
    
    
    
    (79,198
    )
    
    
    (4.9
    %)SBA Loans (1)
    
    
    174,531
    
    
    
    178,399
    
    
    
    (3,868
    )
    
    
    (2.2
    %)Commercial Lines of Credit
    
    
    161,542
    
    
    
    214,699
    
    
    
    (53,157
    )
    
    
    (24.8
    %)International Loans
    
    
    77,492
    
    
    
    95,185
    
    
    
    (17,693
    )
    
    
    (18.6
    %)Total Commercial and Industrial Loans
    
    
    1,945,816
    
    
    
    2,099,732
    
    
    
    (153,916
    )
    
    
    (7.3
    %)Consumer Loans
    
    
    76,098
    
    
    
    83,525
    
    
    
    (7,427
    )
    
    
    (8.9
    %)Total Loans  Gross
    
    
    3,159,309
    
    
    
    3,363,371
    
    
    
    (204,062
    )
    
    
    (6.1
    %)Deferred Loan Fees
    
    
    (1,362
    )
    
    
    (1,260
    )
    
    
    (102
    )
    
    
    8.1
    %Allowance for Loan Losses
    
    
    (105,268
    )
    
    
    (70,986
    )
    
    
    (34,282
    )
    
    
    48.3
    %Net Loans Receivable
    
    $
    3,052,679
    
    
    $
    3,291,125
    
    
    $
    (238,446
    )
    
    
    (7.2
    %)
 
 (1)
    
    Includes loans held for sale, at the lower of cost or market, of $34.3
million and $37.4 million as of June 30, 2009 and December 31, 2008, respectively.   40




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##### Table of Contents



Balance as of
    
    Percentage of TotalIndustry
    
    June 30, 2009
    
    Gross Loans Outstanding(In Thousands)Accommodation/Hospitality
    
    $
    432,427
    
    
    
    13.7
    %Lessors of Non-Residential Buildings
    
    $
    429,671
    
    
    
    13.6
    %Gasoline Stations
    
    $
    377,602
    
    
    
    12.0
    %
  Non-Performing Assets
   June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Non-Accrual Loans
    
    $
    167,255
    
    
    $
    120,823
    
    
    $
    46,432
    
    
    
    38.4
    %Loans 90 Days or More Past Due and Still Accruing
    
    
    41
    
    
    
    1,075
    
    
    
    (1,034
    )
    
    
    (96.2
    %)Total Non-Performing Loans
    
    
    167,296
    
    
    
    121,898
    
    
    
    45,398
    
    
    
    37.2
    %Other Real Estate Owned
    
    
    34,018
    
    
    
    823
    
    
    
    33,195
    
    
    
    4,033.4
    %Total Non-Performing Assets
    
    $
    201,314
    
    
    $
    122,721
    
    
    $
    78,593
    
    
    
    64.0
    %Delinquent Loans
    
    $
    178,663
    
    
    $
    128,469
    
    
    $
    50,194
    
    
    
    39.1
    %
   41




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##### Table of Contents



Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
      42




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##### Table of Contents



As of and for the
    
    
    As of and for theThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    March 31,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    104,943
    
    
    $
    70,986
    
    
    $
    52,986
    
    
    $
    70,986
    
    
    $
    43,611Actual Charge-Offs
    
    
    (24,332
    )
    
    
    (12,516
    )
    
    
    (8,656
    )
    
    
    (36,848
    )
    
    
    (16,508
    )Recoveries on Loans Previously Charged Off
    
    
    735
    
    
    
    703
    
    
    
    436
    
    
    
    1,438
    
    
    
    991Net Loan Charge-Offs
    
    
    (23,597
    )
    
    
    (11,813
    )
    
    
    (8,220
    )
    
    
    (35,410
    )
    
    
    (15,517
    )Provision Charged to Operating Expenses
    
    
    23,922
    
    
    
    45,770
    
    
    
    18,211
    
    
    
    69,692
    
    
    
    34,883Balance at End of Period
    
    $
    105,268
    
    
    $
    104,943
    
    
    $
    62,977
    
    
    $
    105,268
    
    
    $
    62,977Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    4,279
    
    
    $
    4,096
    
    
    $
    2,914
    
    
    $
    4,096
    
    
    $
    1,765Provision Charged to Operating Expenses
    
    
    12
    
    
    
    183
    
    
    
    1,018
    
    
    
    195
    
    
    
    2,167Balance at End of Period
    
    $
    4,291
    
    
    $
    4,279
    
    
    $
    3,932
    
    
    $
    4,291
    
    
    $
    3,932Ratios:Net Loan Charge-Offs to Average Total Gross Loans (1)
    
    
    2.88
    %
    
    
    1.43
    %
    
    
    1.00
    %
    
    
    2.15
    %
    
    
    0.94
    %Net Loan Charge-Offs to Total Gross Loans (1)
    
    
    3.00
    %
    
    
    1.44
    %
    
    
    0.99
    %
    
    
    2.26
    %
    
    
    0.93
    %Allowance for Loan Losses to Average Total Gross Loans
    
    
    3.21
    %
    
    
    3.13
    %
    
    
    1.90
    %
    
    
    3.17
    %
    
    
    1.90
    %Allowance for Loan Losses to Total Gross Loans
    
    
    3.33
    %
    
    
    3.16
    %
    
    
    1.88
    %
    
    
    3.33
    %
    
    
    1.88
    %Net Loan Charge-Offs to Allowance for Loan Losses (1)
    
    
    89.91
    %
    
    
    45.65
    %
    
    
    52.50
    %
    
    
    67.83
    %
    
    
    49.55
    %Net Loan Charge-Offs to Provision Charged to Operating Expenses
    
    
    98.64
    %
    
    
    25.81
    %
    
    
    45.14
    %
    
    
    50.81
    %
    
    
    44.48
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    62.92
    %
    
    
    67.13
    %
    
    
    56.14
    %
    
    
    62.92
    %
    
    
    56.14
    %Balances:Average Total Gross Loans Outstanding During Period
    
    $
    3,283,574
    
    
    $
    3,350,343
    
    
    $
    3,319,141
    
    
    $
    3,316,775
    
    
    $
    3,312,196Total Gross Loans Outstanding at End of Period
    
    $
    3,159,309
    
    
    $
    3,319,722
    
    
    $
    3,355,048
    
    
    $
    3,159,309
    
    
    $
    3,355,048Non-Performing Loans at End of Period
    
    $
    167,296
    
    
    $
    156,331
    
    
    $
    112,182
    
    
    $
    167,296
    
    
    $
    112,182
 
 (1)
    
    Net loan charge-offs are annualized to calculate the ratios. Provision for Credit Losses.
  43




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##### Table of Contents



Deposits
  June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Demand  Noninterest-Bearing
    
    $
    547,737
    
    
    $
    536,944
    
    
    $
    10,793
    
    
    
    2.0
    %Interest-Bearing:Savings
    
    
    88,477
    
    
    
    81,869
    
    
    
    6,608
    
    
    
    8.1
    %Money Market Checking and NOW Accounts
    
    
    424,760
    
    
    
    370,401
    
    
    
    54,359
    
    
    
    14.7
    %Time Deposits of $100,000 or More
    
    
    1,284,491
    
    
    
    849,800
    
    
    
    434,691
    
    
    
    51.2
    %Other Time Deposits
    
    
    942,458
    
    
    
    1,231,066
    
    
    
    (288,608
    )
    
    
    (23.4
    %)Total Deposits
    
    $
    3,287,923
    
    
    $
    3,070,080
    
    
    $
    217,843
    
    
    
    7.1
    %
     Federal Home Loan Bank Advances
  Junior Subordinated Debentures
  44




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##### Table of Contents



INTEREST RATE RISK MANAGEMENT
   AfterThree
    
    
    After OneMonths
    
    
    Year ButWithin
    
    
    But
    
    
    Within
    
    
    After
    
    
    Non-Three
    
    
    Within
    
    
    Five
    
    
    Five
    
    
    Interest-Months
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Sensitive
    
    
    Total(Dollars in Thousands)ASSETSCash and Due From Banks
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    382,826
    
    
    $
    382,826Investment Securities:Fixed Rate
    
    
    35,954
    
    
    
    20,690
    
    
    
    38,680
    
    
    
    105,056
    
    
    
    
    
    
    
    200,380Floating Rate
    
    
    3,193
    
    
    
    
    
    
    
    10,753
    
    
    
    4,497
    
    
    
    
    
    
    
    18,443Loans:Fixed Rate
    
    
    347,054
    
    
    
    180,632
    
    
    
    600,874
    
    
    
    243,399
    
    
    
    
    
    
    
    1,371,959Floating Rate
    
    
    1,490,873
    
    
    
    26,232
    
    
    
    99,930
    
    
    
    1,698
    
    
    
    
    
    
    
    1,618,733Non-Accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,255
    
    
    
    167,255Deferred Loan Fees and Allowance for Loan Losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,268
    )
    
    
    (105,268
    )Investment in Federal Home Loan Bank Stock and
Investment in Federal Reserve Bank Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,750
    
    
    
    
    
    
    
    40,750Other Assets
    
    
    
    
    
    
    25,860
    
    
    
    
    
    
    
    6,882
    
    
    
    143,031
    
    
    
    175,773Total Assets
    
    $
    1,877,074
    
    
    $
    253,414
    
    
    $
    750,237
    
    
    $
    402,282
    
    
    $
    587,844
    
    
    $
    3,870,851LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Demand  Noninterest-Bearing
    
    $
    33,680
    
    
    $
    110,550
    
    
    $
    265,320
    
    
    $
    138,187
    
    
    $
    
    
    
    $
    547,737Savings
    
    
    14,522
    
    
    
    32,669
    
    
    
    35,005
    
    
    
    6,281
    
    
    
    
    
    
    
    88,477Money Market Checking and NOW Accounts
    
    
    61,493
    
    
    
    121,802
    
    
    
    138,479
    
    
    
    102,986
    
    
    
    
    
    
    
    424,760Time Deposits:Fixed Rate
    
    
    1,172,727
    
    
    
    1,020,561
    
    
    
    33,594
    
    
    
    11
    
    
    
    
    
    
    
    2,226,893Floating Rate
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Federal Home Loan Bank Advances
    
    
    203,464
    
    
    
    5,701
    
    
    
    1,787
    
    
    
    
    
    
    
    
    
    
    
    210,952Other Borrowings
    
    
    2,532
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,532Junior Subordinated Debentures
    
    
    82,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,406Other Liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,912
    
    
    
    47,912Stockholders Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239,126
    
    
    
    239,126Total Liabilities and Stockholders Equity
    
    $
    1,570,880
    
    
    $
    1,291,283
    
    
    $
    474,185
    
    
    $
    247,465
    
    
    $
    287,038
    
    
    $
    3,870,851Repricing Gap
    
    $
    306,194
    
    
    $
    (1,037,869
    )
    
    $
    276,052
    
    
    $
    154,817
    
    
    $
    300,806Cumulative Repricing Gap
    
    $
    306,194
    
    
    $
    (731,675
    )
    
    $
    (455,623
    )
    
    $
    (300,806
    )
    
    $
    Cumulative Repricing Gap as a Percentage of
Total Assets
    
    
    7.91
    %
    
    
    (18.90
    %)
    
    
    (11.77
    %)
    
    
    (7.77
    %)
    
    
    Cumulative Repricing Gap as a Percentage of
Interest-Earning Assets
    
    
    9.42
    %
    
    
    (22.51
    %)
    
    
    (14.02
    %)
    
    
    (9.25
    %)
    
    
    
  45




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##### Table of Contents



Less Than Three Months
    
    Less Than Twelve MonthsJune 30,
    
    December 31,
    
    June 30,
    
    December 31,2009
    
    2008
    
    2009
    
    2008(Dollars in Thousands)Cumulative Repricing Gap
    
    $
    306,194
    
    
    $
    1,126,633
    
    
    $
    (731,675
    )
    
    $
    (147,200
    )Cumulative Repricing Gap as a Percentage of Total Assets
    
    
    7.91
    %
    
    
    29.07
    %
    
    
    (18.90
    %)
    
    
    (3.80
    %)Cumulative Repricing Gap as a Percentage of Interest-Earning Assets
    
    
    9.42
    %
    
    
    31.20
    %
    
    
    (22.51
    %)
    
    
    (4.08
    %)
   Rate Shock TablePercentage Changes
    
    Change in AmountChange in
    
    Net
    
    Economic
    
    Net
    
    EconomicInterest
    
    Interest
    
    Value of
    
    Interest
    
    Value ofRate
    
    Income
    
    Equity
    
    Income
    
    Equity(Dollars in Thousands)200%
    
    
    12.36
    %
    
    
    (15.14
    %)
    
    $
    14,291
    
    
    $
    (61,411
    )100%
    
    
    6.43
    %
    
    
    (7.67
    %)
    
    $
    7,434
    
    
    $
    (31,110
    )(100%)
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)(200%)
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)
    
    
    
    (1)
 
 (1)
    
    The table above only reflects the impact of upward shocks due to the fact that a
downward parallel shock of 100 basis points or more is not possible given that some
short-term rates are currently less than one percent.  46




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Capital Resources
  Notes to Consolidated Financial Statements
(Unaudited), Note 11  Subsequent Events
 Liquidity  Hanmi Financial
 Dividends Notes to
Consolidated Financial Statements (Unaudited), Note 10  Regulatory Matters
  Liquidity  Hanmi Bank
  47




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##### Table of Contents



Capital Ratios
  48




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##### Table of Contents



Minimum
    
    Minimum to BeRegulatory
    
    Categorized asActual
    
    Requirement
    

Well-CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in Thousands)Total Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    354,433
    
    
    
    10.72
    %
    
    $
    264,599
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    353,518
    
    
    
    10.70
    %
    
    $
    264,348
    
    
    
    8.00
    %
    
    $
    330,436
    
    
    
    10.00
    %Tier 1 Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    311,773
    
    
    
    9.43
    %
    
    $
    132,299
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    311,114
    
    
    
    9.42
    %
    
    $
    132,174
    
    
    
    4.00
    %
    
    $
    198,261
    
    
    
    6.00
    %Tier 1 Leverage (to Average Total Assets):Hanmi Financial
    
    $
    311,773
    
    
    
    8.02
    %
    
    $
    155,589
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    311,114
    
    
    
    8.01
    %
    
    $
    155,446
    
    
    
    4.00
    %
    
    $
    194,308
    
    
    
    5.00
    %
 Regulatory Matters
  Government Programs
    49




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##### Table of Contents



Regulatory Matters
      50




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##### Table of Contents



Possible Future Regulatory Actions
 Notes to Consolidated Financial
Statements (Unaudited), Note 10  Regulatory Matters.
 Dividends
    51




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##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
 Note 8  Off-Balance Sheet
Commitments Item 1.
Business  Off-Balance Sheet Commitments
 CONTRACTUAL OBLIGATIONS
  RECENTLY ISSUED ACCOUNTING STANDARDS
 SFAS No. 168, The FASB Accounting Standards Codification Ô and the Hierarchy of
Generally Accepted Accounting Principles The Hierarchy of
Generally Accepted Accounting Principles,
 SFAS No. 167, Amendments to FASB Interpretation No. 46(R) Disclosures by Public Entities
(Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.
 SFAS No. 166, Accounting for Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.
 52




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##### Table of Contents



SFAS No. 165, Subsequent Events
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Interest Rate Risk Management  Liquidity and Capital Resources.
 
 ITEM 4. CONTROLS AND PROCEDURES
    
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  53




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##### Table of Contents



ITEM 1A. RISK FACTORS
 Our operations may require us to raise additional capital in the future, but that capital may
not be available or may not be on terms acceptable to us when it is needed.
   We may be unable to retain or replace brokered deposits as they mature.
  Our proposed transaction to sell additional shares of common stock to LIS is subject to a
number of conditions, and the failure to complete this transaction could adversely affect our
financial condition, results of operations and prospects as a going concern.
 54




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##### Table of Contents



We
expect that the Bank will become subject to a formal administrative
action that we expect
will place additional restrictions on its operations. Notes to Consolidated Financial Statements
(Unaudited), Note 10  Regulatory Matters.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  55




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of Directors. To elect three directors of Hanmi Financial, each for a term
of three years; provided that, if the Board of Directors Declassification Proposal is
approved (Proposal No. 2), to elect three directors for terms expiring at the 2010 Annual
Meeting of Stockholders, and in either case, for the elected directors to serve until their
successors are elected and qualified;2.
    
    Board of Directors Declassification Proposal. To approve the proposal to amend Hanmi
Financials Certificate of Incorporation to eliminate the provisions for the classification
of Hanmi Financials Board of Directors and thereby provide that each person elected as a
director at the Annual Meeting and subsequent annual meetings will be elected to a term of
one year and serve until their successors are elected and qualified; and3.
    
    Ratification of Independent Registered Public Accounting Firm. To ratify the
appointment of KPMG LLP as Hanmi Financials independent registered public accounting firm
for the fiscal year ending December 31, 2009.
 Proposal No. 1  Election of Directors
  Votes
    
    VotesClass I Director Nominees
    
    For
    
    WithheldI Joon Ahn
    
    
    37,726,851
    
    
    
    4,965,033Joon Hyung Lee
    
    
    37,541,287
    
    
    
    5,150,597Joseph K. Rho
    
    
    37,436,745
    
    
    
    5,255,139
  Class II Directors  Terms Expire in 2010:
    
    Class III Directors  Terms Expire in 2011:John A. Hall
    
    Paul Seon-Hong KimJay S. Yoo
    
    William J. Stolte
 Proposal No. 2  Board of Directors Declassification Proposal
  Votes
    
    Votes
    
    
    
    
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes41,038,015
    
    
    1,322,624
    
    
    
    331,245
    
    
    
    
 Proposal No. 3  Ratification of Independent Registered Public Accounting Firm
  Votes
    
    Votes
    
    
    
    
    
    BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes42,290,917
    
    
    326,090
    
    
    
    74,877
    
    
    
 
 ITEM 5. OTHER INFORMATION
  56




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##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Document3.1
    
    Amended and Restated Certificate of Incorporation of Hanmi Financial Corporation (8)3.2
    
    Certificate of Second Amendment of Certificate of Incorporation of Hanmi Financial Corporation (8)3.3
    
    Amended and Restated Bylaws of Hanmi Financial Corporation (8)3.4
    
    Certificate of Amendment to Bylaws of Hanmi Financial Corporation (8)10.1
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust I dated as of January 8, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (2)10.2
    
    Hanmi Capital Trust I Junior Subordinated Indenture dated as of January 8, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.1) (2)10.3
    
    Hanmi Capital Trust I Guarantee Agreement dated as of January 8, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (2)10.4
    
    Hanmi Capital Trust I Form of Common Securities Certificate (included as exhibit B to Exhibit 10.1) (2)10.5
    
    Hanmi Capital Trust I Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.1) (2)10.6
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust II dated as of March 15, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (2)10.7
    
    Hanmi Capital Trust II Junior Subordinated Indenture dated as of March 15, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.6) (2)10.8
    
    Hanmi Capital Trust II Guarantee Agreement dated as of March 15, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (2)10.9
    
    Hanmi Capital Trust II Form of Common Securities Certificate (included as exhibit B to Exhibit 10.6) (2)10.10
    
    Hanmi Capital Trust II Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.6) (2)10.11
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust III dated as of April 28, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (2)10.12
    
    Hanmi Capital Trust III Junior Subordinated Indenture dated as of April 28, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.11)
(2)10.13
    
    Hanmi Capital Trust III Guarantee Agreement dated as of April 28, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (2)10.14
    
    Hanmi Capital Trust III Form of Common Securities Certificate (included as exhibit B to Exhibit 10.11) (2)10.15
    
    Hanmi Capital Trust III Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.11) (2)10.16
    
    Employment Agreement Between Hanmi Financial Corporation and Hanmi Bank, on the One Hand, and Jay S. Yoo, on the Other
Hand, dated as of June 19, 2008 (3)10.17
    
    Hanmi Financial Corporation 2007 Equity Compensation Plan (1)10.18
    
    Employment Offer Letter to John Park from Hanmi Bank dated August 13, 2008 (4)10.19
    
    Hanmi Financial Corporation Year 2000 Stock Option Plan (7)10.20
    
    Form of Notice of Stock Option Grant and Agreement Pursuant to 2007 Equity Compensation Plan (8)10.21
    
    Form of Notice of Grant and Restricted Stock Agreement Pursuant to 2007 Equity Compensation Plan (8)10.22
    
    Employment Offer Letter with Brian E. Cho, executed November 1, 2007 (6)10.23
    
    Securities Purchase Agreement, dated June 12, 2009, by and between Hanmi Financial Corporation and Leading Investments &
Securities Co., Ltd. (9)10.24
    
    Registration Rights Agreement, dated June 12, 2009, by and between Hanmi Financial Corporation and Leading Investments &
Securities Co., Ltd. (9)10.25
    
    First Amendment to the Securities Purchase Agreement, dated July 31, 2009, by and between Hanmi Financial Corporation
and Leading Investment & Securities Co., Ltd. (10)14
    
    Code of Ethics (5)21
    
    Subsidiaries of the Registrant (6)
 57




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##### Table of Contents



ITEM 6. EXHIBITS (Continued)
 ExhibitNumber
    
    Document31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Current
Report on Form 8-K filed with the SEC on June 26, 2007.(2)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 filed with the SEC on August
9, 2004.(3)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed with the SEC on August
11, 2008.(4)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 filed with the SEC on
November 7, 2008.(5)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2004 filed with the SEC on March 16, 2005.(6)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on February 29,
2008.(7)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Registration Statement on Form S-8 filed with the SEC on August 18, 2000.(8)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 13, 2009.(9)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Current
Report on Form 8-K filed with the SEC on June 15, 2009.(10)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on August 3, 2009. 58




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SIGNATURES
  HANMI FINANCIAL CORPORATIONDate: August 17, 2009
    By:
    /s/ Jay S. YooJay S. YooPresident and Chief Executive OfficerBy:
    /s/ Brian E. ChoBrian E. ChoExecutive Vice President and Chief Financial Officer 59